Defined benefit seems to survive in the Netherlands: How comes? Bart van Riel Social Economic Council the Netherlands (co-author Eduard Ponds, ABP)

Contents Theme: Sharing risks: The Netherlands new approach to pensions. 1. Extremely brief introduction to the Dutch pension system 2. Backgrounds to the switch to conditionally indexed average-wage pension plans: the switch to equity and the crisis on stock markets 3. A closer look at this switch: pure DB? 4. Explaining the switch 5. Evaluating the switch 6. Alternatives: collective and individual DC

1. Extremely brief introduction to the Dutch pension system Three pillars: state (PAYG), supplementary pension funds (funded), individual: life insurance and annuities. Integration of first and second pillar: ambition level 70%. Compared with most EU countries supplementary pensions relatively important for households, and this will increase. Dominance of industry wide funds (mandatory participation in absence of company pension fund). Joint management of social partners

1. An extremely short introduction to the Dutch pension system: pension funds

1. An extremely short introduction to the Dutch pension system: pension funds: the switch to average wage schemes

2. Backgrounds to the switch: the switch to equity

2. Backgrounds to the switch: the switch to equity implies more volatile incomes

3. A closer look at this switch: pure DB?

4. Explaining the switch Ageing and the ineffectiveness of the contribution rate as a steering mechanism Loading the risks to pensioners? Conditionally indexed schemes as a compromise solution. The adherence to collective risk sharing.

5. Evaluating the switch Pro’s Superior solvency risk management Welfare gains because of broad intergenerational risk sharing capacities Cons Too much value transfers from old to young workers? Do people understand the consequences of the switch? Complexities and market failures make it difficult for individuals to undo risks

6. Alternatives: collective DC

6. Alternatives: the costs of individual DC