Reforming the Dutch pension system to ensure sustainability
Westerhout,Ed Ponds,Eduard Zwaneveld,Peter
Westerhout,Ed
Ponds,Eduard
Zwaneveld,Peter
Abstract
The Netherlands is on the brink of reforming its system of occupational pensions as part of a more general reform of its three-pillar pension system. This reform features important changes to first pillar pension benefits. The focus of this article is however on the coming reform of occupational pensions, the second pillar of the system, which concerns both pension contributions and benefits. This reform is related to a series of reforms that have gradually transformed the pension contract that was dominant 20 years ago, a final salary defined benefit contract, into a collective defined contribution contract. We argue that these reforms are a response to changes in the external environment, such as population ageing and a secular decline of interest rates. The coming reform responds to the call for a pension scheme that is more individualistic, more closely connected to the labour market, and which does not share interest rate risks between generations. The New Pension Contract remains in part collective, since the assets of participants are invested collectively, and a mandatory solidarity fund can be used for intergenerational risk sharing.
Description
Publisher Copyright: © 2024 The Author(s). International Social Security Review published by John Wiley & Sons Ltd on behalf of International Social Security Association.
Date
2024-09-30
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Research Projects
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Keywords
The Netherlands, ageing, defined benefit, defined contribution, interest rate, pension scheme, reform, SDG 1 - No Poverty, SDG 8 - Decent Work and Economic Growth
Citation
Westerhout, E, Ponds, E & Zwaneveld, P 2024, 'Reforming the Dutch pension system to ensure sustainability', International Social Security Review, vol. 77, no. 3, pp. 99-122. https://doi.org/10.1111/issr.12368