The sustainability of the Dutch pension system

This study addresses the sustainability of the Dutch system of supplementary pensions, that is, supplementary to the state old-age pension. Traditionally, the system is characterised by high-quality defined-benefit schemes that offer members a high degree of pension security. However, the pension landscape has been subject to vast changes. The population is ageing, the effects of globalisation are making themselves increasingly felt and, in the world at large, defined-contribution schemes are becoming ever more usual. Competition in the pensions sector is being encourage, for instance by permitting pension funds to operate cross-border schemes within Europe. In addition, a decision has recently been made about a new statutory framework for pension arrangements. The present study reviews the financial consequences of these developments for the Dutch pension system. It does so by describing the principal pension risk in relation to the pension funds' financial policies, by examining recent changes in the Dutch pension system, and by analysing the pension sector's vulnerability to macro-economic shocks through simulations. The study concludes that the recent changes in pension schemes and in pension funds' financing have enhanced the system's controllability and, hence, its sustainability.