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Private Pensions in the Netherlands Dirk Witteveen Chairman of the Dutch Pensions and Insurance Supervisory Authority IAIS Annual Conference Santiago, Chile 9 October 2002
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Programme The Dutch pension system Organisation of supervision Market fall and / or stability Conclusions
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The Dutch pension system Historical overview –19th century: charity and family care –First half 20th century: organised solidarity Insurance side: mutuals –1950s: Occupational pension arrangements Solidarity Pension as social contract Facilities by government –1957: General Old Age Act
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Result Stable pension system - low risk for the beneficiary - no direct investment risk- 100% separation between sponsor and fund (premiums not invested in the sponsor) - in fact indexed and low costs through mutual pension funds Defined benefit pension Pension is purchasing power –improves social stability/improves financial stability/enhances competitiveness
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Traditional supervision: High level of self-regulation –Supervision concentrated on funding Fit-and-proper test of board
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Supervision Shift towards more stringent supervision –Financial importance of pension funds –Decrease of implicit solidarity –Increased transparency –Risk management –Asset management –Inflation risk
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Fall in the equity markets Equities fallen drastically –Average funding still over 100% –PVK decided to tighten regulation Possible measures –Raising premiums –Waiver of indexation –Different alternatives ask (mutual) guarantees, deferred loans or extra sponsor funding –To be clear- a shift of the investment risk from the pension fund itself to the beneficiary is to my opinion adverse
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Concluding remarks A pension system should be based and judged upon the social and historical context of a country Good and fair pensions contribute to a stable society and a competitive economy Good and strict supervision is part of a sound pension system There is work to be done including co-operation, exchange of views and best practices
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