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Reforming occupational pension schemes: the case of the Netherlands

Author

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  • Lans Bovenberg
  • Raymond Gradus

Abstract

In many countries, occupational plans are being reformed away from defined-benefit (DB) to defined-contribution (DC) designs. This paper explores the case of the Netherlands, which features a particularly high ratio of occupational pension assets to GDP. Dutch occupational DB plans suffer from a number of serious weaknesses, including ambiguous ownership of assets, back-loading of benefits, and lack of tailor-made risk management. To address these weaknesses, we propose collective individual DC plans that are actuarially fair. These schemes maintain important strengths of collective schemes, such as mandatory saving, collective procurement, and pooling of biometric risks. At the same time, they eliminate intergenerational conflicts about risk management and distribution through transparent individual property rights on financial assets and tailor-made risk profiles in individual accounts. We show how the transitional burden due to phasing out the back-loading of pension benefits can be addressed without a substantial increase in contributions.

Suggested Citation

  • Lans Bovenberg & Raymond Gradus, 2015. "Reforming occupational pension schemes: the case of the Netherlands," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 18(3), pages 244-257, July.
    • Handle: RePEc:taf:jecprf:v:18:y:2015:i:3:p:244-257
    DOI: 10.1080/17487870.2015.1041525
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    Citations

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    Cited by:

    1. Lindeboom, Maarten & Montizaan, Raymond, 2018. "Pension Reform: Disentangling Retirement and Savings Responses," Research Memorandum 019, Maastricht University, Graduate School of Business and Economics (GSBE).
    2. Eberhardt, Wiebke & Brüggen, Elisabeth & Post, Thomas & Hoet, Chantal, 2021. "Engagement behavior and financial well-being: The effect of message framing in online pension communication," International Journal of Research in Marketing, Elsevier, vol. 38(2), pages 448-471.
    3. Lindeboom, Maarten & Montizaan, Raymond, 2020. "Disentangling retirement and savings responses," Journal of Public Economics, Elsevier, vol. 192(C).
    4. Kaufmann, Katja Maria & Özdemir, Yasemin & Ye, Han, 2022. "Spillover Effects of Old-Age Pension across Generations: Family Labor Supply and Child Outcomes," IZA Discussion Papers 15388, Institute of Labor Economics (IZA).
    5. Westerhout, Ed, 2020. "The Adverse and Beneficial effects of Front-Loaded Pension Contributions," Discussion Paper 2020-016, Tilburg University, Center for Economic Research.
    6. Hendrik P. Dalen & Kène Henkens, 2022. "Trust and Distrust in Pension Providers in Times of Decline and Reform: Analysis of Survey Data 2004–2021," De Economist, Springer, vol. 170(4), pages 401-433, November.
    7. Westerhout, Ed, 2020. "The Adverse and Beneficial effects of Front-Loaded Pension Contributions," Other publications TiSEM 25806b9b-8208-4ae6-b309-4, Tilburg University, School of Economics and Management.
    8. van Dalen, Hendrik Peter & Henkens, K., 2022. "Trust and Distrust in Pension Providers in Times of Decline and Reform," Other publications TiSEM 430443a0-b060-42fd-ad9c-2, Tilburg University, School of Economics and Management.

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