1. Montreal, june 9 2014 Benne van Popta
Recent developments in Dutch pension system International Pensions Conference
Montreal, june
Benne van Popta

2. Dutch three pillar pension system
International Pension Conference of Montreal
Dutch three pillar pension system
Public/ universal/ paygo
Private/ occupational/ mandatory/ funded
Private/ personal/ individual choice/ funded

3. Aim of the Dutch Pension System
International Pension Conference of Montreal
Aim of the Dutch Pension System
A replacement rate of about 70% of average income (1st and 2nd pillar)

4. First pillar Public Universal
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First pillar
Public
Universal
Benefit is fixed amount, not income/ work related
Paid by part of the income tax
First pillar

5. Second pillar Funded, assets about 140% GDP
International Pension Conference of Montreal
Second pillar
Funded, assets about 140% GDP
Pensionfonds: industry-wide, company, liberal professions
Number of pensionfonds: 400. Is decreasing
Economies of scale, low investment costs
Pension contract based on collectieve labor agreements
Second pillar

6. Why is the second pillar so large?
International Pension Conference of Montreal
Why is the second pillar so large?
First pillar aimed at poverty prevention
We started early (1950/60s)
Mandatory: collective agreements are extended to non-members
Mandatory: consequence is that every employee participates

7. PMT figures Average wage: 33,000 euros/year
International Pension Conference of Montreal
PMT figures
Average wage: 33,000 euros/year
Average new pension 9,500 euros/year
Total average pensionincome (including first pillar): 29,000 euros/year

8. PMT figures 33,170 employers, 570,000 participants
International Pension Conference of Montreal
PMT figures
33,170 employers, 570,000 participants
Asset: 48 billion. Costs assetmanagement: 35.4 bsp
Costs pensionadministration per participant (CEM 2012): 80 euros a year (peer average is 152 euros)
Average return, 5-years: 9.3% 10-years: 6.6% Since 1995: 7%

9. Changes after dot.com bubble
International Pension Conference of Montreal
Changes after dot.com bubble
From final pay to average pay
From unconditional to conditional indexation
Benefit haircut as a last resort measure

10. Discussions after the financial crisis (1)
International Pension Conference of Montreal
Discussions after the financial crisis (1)
First wave of solutions last for about 5-10 years
(Automatic) increase in retirement age
Is there something in between flexible, collective DB and individual DC?

11. Discussions after the financial crisis (2)
International Pension Conference of Montreal
Discussions after the financial crisis (2)
Risk sharing, intergenerational solidarity, individual choice?
Compulsory saving for retirement will stay!
Independant workers, self employed, small business owners?