Reforming occupational pension schemes: The case of the Netherlands
Bovenberg,Lans Gradus,R.
Bovenberg,Lans
Gradus,R.
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.
Description
Date
2015
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
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Journal Issue
Keywords
collective, individual, pension reform, the Netherlands, J32 - Nonwage Labor Costs and Benefits ; Retirement Plans ; Private Pensions, J10 - General, J40 - General, J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity, SDG 1 - No Poverty
Citation
Bovenberg, L & Gradus, R 2015, 'Reforming occupational pension schemes : The case of the Netherlands', Journal of Economic Policy Reform, vol. 18, no. 3, pp. 244-257. https://doi.org/10.1080/17487870.2015.1041525