Netherlands hikes disability premium despite €39 billion surplus, drawing backlash
The Dutch government is facing intensifying criticism after announcing further increases to the disability insurance premium while the fund it supports holds a surplus of about 39 billion euros, with employers, municipalities, and unions warning the measure is being used to cover unrelated budget gaps, NOS reported.
The policy has also triggered a growing legal challenge, with about 2,500 employers joining a mass claim against the Dutch tax authority to recover what they say are excessive premiums paid in recent years.
The premium feeds the Arbeidsongeschiktheidsfonds (Aof), which finances disability benefits such as WIA payments. Employer contributions have risen steadily, reaching about 7.6 percent of wages this year. Since 2017, the fund’s reserves have increased significantly as annual revenues have consistently exceeded expenditures. Under European budget rules, surpluses in the fund can be used to offset deficits elsewhere in the national budget.
Despite the surplus, the government plans additional hikes. Budget documents reportedly show the increases are intended to offset disappointing health insurance revenues and to help fund higher defense spending.
A spokesperson for the Vereniging Nederlandse Gemeenten said the rising premium is out of step with the fund’s financial position. “It is raising eyebrows among us and other large employers. The balance has been significantly out of line since 2020,” the spokesperson said.
Municipalities estimate the defense-related increase alone will cost them an additional 34 million euros. The VNG said alternatives should be considered. “On the face of it, other alternatives should be possible than collecting this through the disability premium,” the spokesperson added.
At the same time, those rules limit how the accumulated funds can be spent, preventing the surplus from being freely used, even for disability-related setbacks.
Labor union FNV has sharply criticized the policy. Interim chairman Dick Koerselman said the government is misusing the premium. “The cabinet is looking for money and is now turning the premium into an improper tax. It is being used as a hidden phantom tax,” he said.
The union said it will push to block the use of the premium for defense spending, particularly as the government is also considering cuts to disability benefits. It is also calling for greater control over social funds to be returned to employers’ and workers’ organizations. “After all, it is an insurance premium intended for workers; it is our money,” Koerselman said.
Meanwhile, municipalities and employers are seeking relief through both legal and administrative channels. While some municipalities have joined the legal claim, the VNG has opted not to participate, saying it does not want to directly oppose the national government and instead hopes to influence policy through consultations.