The ‘cycle of life’ legislation

1. The ‘cycle of life’ legislation Rik Jansen Budapest, July 5th 2007

2. The ‘cycle of life’ legislation • Introduced on 1-1-2006 • Intention: to take a leave of absence in the rush-hour of life e.a. maturnity leave • Later: also for possible early retirement • Also abolishment of other legislation concerning early retirement due to the Lissabon convention • Only for employees, why?

3. The ‘cycle of life’ legislation System I • Employee can save up to 12% of it’s yearly gross salary • Special group age 51-56: up to 100% a year • To a maximum of 210% of the yearly gross salary • Savings on special ‘cycle of life’ account • Savings only in money not in time • EET Method • Bonus of 188 (2007) for every participated year at (partial) withdrawel of account • Bonus for maturnity leave: 50% of the minumum wage

4. The ‘cycle of life’ legislation System II • Taking leave of absence not a right! • Approval of employer acquired • Problematic for smaller companies • When account is not (fully) withdrawn the ammount can be added to pension (when under 70%). But no bonus • Buy out: no revision interest and thus a relevant option when cash is needed, although directly taxed Conclusion: very flexibel

5. The ‘cycle of life’ legislation Unpopular • Other legislation: ‘saved wages’ legislation • Already has over 4 million participants • Can’t opt for both Current affairs • Intention to integrate ‘cycle of life’ legislation with the ‘saved wages’ legislation • Then one size fits all legislation: savings in money and in time • Foreseeable problem: how to combine them properly

6. The ‘cycle of life’ legislation International aspects • Art. 15 OECD, employment? Or art. 18 OECD, pensions? • Depends on how ‘walk of life’ is used • Intention: leave of absence or early retirement? • Possible problem (double taxation): unequal treatment of residentship of countries involved

7. The ‘cycle of life’ legislation Thank you Questions?