A few years ago, youth unemployment rose and at the same time it became clear that we had to work longer. The early retirement scheme (VUT) was abolished, the state pension age was raised and sparing measures came into effect at a later age. That is why the idea for a generation pact arose around 2010. Older employees are given the opportunity to work less, which offers younger employees room for permanent contracts and promotions. That is why it is called a generation pact: it is an alliance between generations that benefits young, old and the employer.
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Benefits for older employees
As an older employee you have to work less, which has a direct positive effect on your health. With more rest and less stress, you will enjoy going to work more happily. The fact that your pension accrual continues in full also offers financial peace of mind for after retirement. You hand in wages, but this is often half compensated by your employer – so your household book usually doesn't have to suffer as a result. In addition, you can sometimes supplement your income with a part-time pension or payment of any leave reservoir. In short: the Generation Pact ensures that you reach your pension in a healthier, more enjoyable and more active way, without causing you financial worries.
Benefits of younger employees
The space that becomes available can be used by younger employees to enforce a permanent contract. A permanent job with a fixed income offers many opportunities and possibilities to further shape your life. For example, it provides the financial security to buy your own home or to start a family. In this way, the Generation Pact can be the key to the rest of your life, in which you worry less about a stable income, work and your future.
Employer benefits
Employers also benefit from a generation pact. Healthy older colleagues are more productive and more profitable. In addition, employers have to pay much less sick pay and look for replacements: older employees can pass on their knowledge and experience to their younger colleagues in a good way. Young employees start at a lower salary level and are therefore cheaper. At the same time, a permanent job boosts their job satisfaction and loyalty. Given the increasing aging of the population, it is vital for companies to get young employees on board. Are they inside? Then it becomes easier to make a career within the organization, thanks to the room to move on. In this way, knowledge is properly transferred and retained.
In short: for employers, the Generation Pact contributes to cost reduction and healthy business operations through a balanced age structure of the staff. This improves the future prospects of companies.
Tailor-made agreements
De Unie has worked in the past ten years to get a generation pact in the collective labor agreement in as many companies, branches and sectors as possible. Generation pacts have all been concluded in the Metalektro, Metal and Technology, government sectors, financials, security, construction, oil, gas and petrochemical industries. And we notice that this meets a growing need to take it easy from a certain age. Wherever we make agreements, we look at how best to organize a generational pact.
How does it work?
There are many ways to work out a generational pact. But basically every generation scheme is a so-called x/y/z scheme: z stands for your pension accrual, y for your salary and x for the working time factor. Z is actually always 100 percent: you continue to accrue full pension. From 120 months before your retirement age - so from approximately 57 - it is tax-technically possible to continue to build up 100 percent of your pension, without financial consequences. That is why you can never participate in a generation pact before you are 57.
X is a percentage of your current employment. If you now have a full-time contract, then you work 100 percent. The most common X's are those of 50, 60, and 80 percent. 50 percent is the lower limit, again because of tax rules. So if you now work 40 hours a week and there is an arrangement in your collective labor agreement that you can work 50 percent in a generation pact, then you will only work 20 hours.
Y is the percentage of your salary that you will receive when participating in the Generation Pact. This is often exactly between x and z. With this, your employer compensates half of your salary loss because you work less. If you work 50 percent, you will receive a 75 percent salary and 100 percent pension accrual. Working 60 percent yields 80 percent salary and 100 percent pension accrual. And then you also have 80/90/100: you work 1 day a week less, receive 90 percent of your old salary and accrue 100 percent pension.
Financial insight
Sometimes it is difficult to oversee exactly what the Generation Pact does with your household book. That's why De Unie is committed to a thorough financial overview of the financial consequences of participation. You want certainty that you can continue to pay the bills of today and tomorrow. In many Generation Pact agreements we also record free financial insight.
No generation pact in your collective labor agreement?
Please contact us and we will be happy to discuss possible alternatives. For example, even if no agreements have been made about a generation pact, it is best to discuss with your employer that you are phasing out early and which conditions apply. Perhaps you can use a personal choice budget for this, for example. Or buy extra leave. In addition, it may be possible to adjust your schedule or work.
Interested?
If you are interested in the Generation Pact in your sector or company, please inquire De Unie† Or check whether the generation pact is in your collective labor agreement. Has a generation pact been concluded in your collective labor agreement in the past? Then your company or sector will certainly pay attention to it. And do you have questions about this blog, the Generation Pact or the consequences that participation can have? Please contact our Service Center. We are available every working day from 8.00 am to 18.00 pm via sc@unie.nl and 0345 851 963.
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