Collective pensions and the global financial crisis

The case of the Netherlands

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review

Abstract

The global financial crisis triggered a major redesign of the collective pension system in the Netherlands. The current Dutch system can be characterized as a defined benefit system with nominal guarantees, which are increased in line with inflation if investment returns are satisfactory. The crisis has shown that cuts in nominal benefits cannot be excluded because investment policy does not defend the nominal guarantees. In the redesigned contract, pension incomes depend more explicitly on the investment returns with lower guarantee levels that are defended in case of low investment returns. Allowing some individual choice with respect to risk taking is currently under discussion. As a side effect of adjusting the contract in the light of the financial crisis, funds no longer insure workers against systematic longevity risk during the accumulation phase. The chapter analyzes the pros and cons of these adjustments to the contract.
Original languageEnglish
Title of host publicationReshaping Retirement Security, Lessons from the Global Financial Crisis
EditorsR. Maurer, O.S. Mitchell, M.J. Warshawsky
Place of PublicationOxford
PublisherOxford University Press
Pages235-261
Number of pages312
ISBN (Print)9780199660698
Publication statusPublished - 2012

Fingerprint

Global financial crisis
Pensions
The Netherlands
Guarantee
Longevity risk
Financial crisis
Pension system
Income
Investment policy
Redesign
Workers
Side effects
Inflation
Risk taking
Defined benefit

Cite this

Bovenberg, A. L., & Nijman, T. E. (2012). Collective pensions and the global financial crisis: The case of the Netherlands. In R. Maurer, O. S. Mitchell, & M. J. Warshawsky (Eds.), Reshaping Retirement Security, Lessons from the Global Financial Crisis (pp. 235-261). Oxford: Oxford University Press.
Bovenberg, A.L. ; Nijman, T.E. / Collective pensions and the global financial crisis : The case of the Netherlands. Reshaping Retirement Security, Lessons from the Global Financial Crisis. editor / R. Maurer ; O.S. Mitchell ; M.J. Warshawsky. Oxford : Oxford University Press, 2012. pp. 235-261
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Bovenberg, AL & Nijman, TE 2012, Collective pensions and the global financial crisis: The case of the Netherlands. in R Maurer, OS Mitchell & MJ Warshawsky (eds), Reshaping Retirement Security, Lessons from the Global Financial Crisis. Oxford University Press, Oxford, pp. 235-261.

Collective pensions and the global financial crisis : The case of the Netherlands. / Bovenberg, A.L.; Nijman, T.E.

Reshaping Retirement Security, Lessons from the Global Financial Crisis. ed. / R. Maurer; O.S. Mitchell; M.J. Warshawsky. Oxford : Oxford University Press, 2012. p. 235-261.

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review

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N2 - The global financial crisis triggered a major redesign of the collective pension system in the Netherlands. The current Dutch system can be characterized as a defined benefit system with nominal guarantees, which are increased in line with inflation if investment returns are satisfactory. The crisis has shown that cuts in nominal benefits cannot be excluded because investment policy does not defend the nominal guarantees. In the redesigned contract, pension incomes depend more explicitly on the investment returns with lower guarantee levels that are defended in case of low investment returns. Allowing some individual choice with respect to risk taking is currently under discussion. As a side effect of adjusting the contract in the light of the financial crisis, funds no longer insure workers against systematic longevity risk during the accumulation phase. The chapter analyzes the pros and cons of these adjustments to the contract.

AB - The global financial crisis triggered a major redesign of the collective pension system in the Netherlands. The current Dutch system can be characterized as a defined benefit system with nominal guarantees, which are increased in line with inflation if investment returns are satisfactory. The crisis has shown that cuts in nominal benefits cannot be excluded because investment policy does not defend the nominal guarantees. In the redesigned contract, pension incomes depend more explicitly on the investment returns with lower guarantee levels that are defended in case of low investment returns. Allowing some individual choice with respect to risk taking is currently under discussion. As a side effect of adjusting the contract in the light of the financial crisis, funds no longer insure workers against systematic longevity risk during the accumulation phase. The chapter analyzes the pros and cons of these adjustments to the contract.

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SN - 9780199660698

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EP - 261

BT - Reshaping Retirement Security, Lessons from the Global Financial Crisis

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A2 - Warshawsky, M.J.

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ER -

Bovenberg AL, Nijman TE. Collective pensions and the global financial crisis: The case of the Netherlands. In Maurer R, Mitchell OS, Warshawsky MJ, editors, Reshaping Retirement Security, Lessons from the Global Financial Crisis. Oxford: Oxford University Press. 2012. p. 235-261