Reforming occupational pension schemes

The case of the Netherlands

Lans Bovenberg, R. Gradus

Research output: Contribution to journalArticleScientificpeer-review

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.
Original languageEnglish
Pages (from-to)244-257
JournalJournal of Economic Policy Reform
Volume18
Issue number3
DOIs
Publication statusPublished - 2015

Fingerprint

Risk management
Pension scheme
Assets
Occupational pension
Defined benefit
The Netherlands
Procurement
Ownership
Burden
Defined contribution
Biometrics
Property rights
Pensions
Pooling
Financial assets
Defined contribution plan

Keywords

  • collective
  • individual
  • pension reform
  • the Netherlands

Cite this

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Reforming occupational pension schemes : The case of the Netherlands. / Bovenberg, Lans; Gradus, R.

In: Journal of Economic Policy Reform, Vol. 18, No. 3, 2015, p. 244-257.

Research output: Contribution to journalArticleScientificpeer-review

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