Just to clarify, the FO was still an FO because he was hired without having done the ATPL theoretical exams, so on a CPL or limited ATPL. Therefore, it was impossible for the person to become captain.
Official retirement age for pilots is 60 in The Netherlands, and it is possible to work till you're 60. Many airlines offer the ability to cut down your work hours, ie. working for 75% or even 50%, which should allow for the hiring of new pilots when a senior pilot goes from 100% to less work time.
I do not believe it's correct to send someone into forced retirement from a job that's very dear to that person just because there are others who want his job, be they younger or not.