8.5 Link between life expectancy at the age of 65 and the retirement age in the first and second tiers The Raising of the State Pension Age and Standard Pension Retirement Age Act (Wet verhoging AOW-en pensioenrichtleeftijd) of 12 July 2012 links the retirement age in the first tier (the state old-age pension or ‘AOW’) and the standard retirement age in the second tier (the employer’s pension) to period life expectancy. In accordance with the Act of 4 June 2015 in relation to the accelerated gradual increase in the State Pensions age3, a decision must be taken at the latest on 1 January 2017 to determine whether the State Pension age is increased in 2022 from 67 years to 67 years and three months. Increases in the retirement age take place in steps of three months and depend on the level of the macro average remaining period life expectancy at the age of 65 (L), as estimated by Statistics Netherlands relative to a value of 18.26 and the difference between the retirement age applicable up until that moment and 65 years. The reference value of 18.26 has been determined by law and is based on observations of Statistics Netherlands in the period 2000-2009. If it is expected that L for 2022 will be greater than 20.51 years, an increase in the commencement date of the state old-age pension by a quarter of a year (0.25) is necessary (after all, (20.51 – 18.26) – (67 – 65) = 0.25). According to Projection Table AG2016, L will indeed exceed this value in 2022. This expectation is in line with the most recent projection by Statistics Netherlands from 2015 and a decision will have to be taken in respect of this increase in 2022 at the latest on 1 January 2017. After this, the same method will be applied annually, whereby it will be necessary to determine whether an increase in the State Pension age pension by a quarter of a year will or will not take place. If the macro average remaining period life expectancy at the age of 65 years is also estimated for the years after 2022, the following years are determined in which the commencement date of the state old-age pension is expected to increase by a full year. To simplify the calculation, the macro average remaining life expectancy is determined below as the weighted average of the life expectancy of men and women. In practice, a more exact weighting may possibly be assigned, as a result of which women will be assigned a slightly higher weighting. The impact of this is small. Commencement date of the state old-age pension (AOW) 68 69 70 71 3 – In full: Act of 4 June 2015 amending the General Old-age Pensions Act, the Salary Tax Act 1964, the Raising of the State Pension Age and Standard Pension Retirement Age Act, the Obligatory Occupational Pension Scheme Act and Other Fiscal Measures in 2015 in Relation to the Accelerated Gradual Increase in the State Pension age. Projection Table AG2016 CBS2015 2029 2036 2045 2054 AG2016 2027 2035 2044 2053 Table 6 Estimate of the development of the State Pension age The increase in the standard retirement age in the second tier is based on the same formula as the State Pension age, although, in accordance with the Act, it is necessary to anticipate an expected increase in life expectancy at an earlier stage. It is a legal requirement that a change to the standard retirement age must be announced at least one year prior to this change taking effect and that for this purpose the macro average remaining life expectancy at the age of 65 must be taken into account that is expected 10 years after the calendar year in which the change is made. This means, for instance, that an change to the standard retirement age in 2018 must be announced before 1 January 2017 on the basis of the macro average remaining life expectancy at the age of 65 in 2028. Outcomes 23
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