Reform Options for Mature Defined Benefit Pension Plans: The Case of the Netherlands

Marc Gerard

No 2019/022, IMF Working Papers from International Monetary Fund

Abstract: The Netherlands has been operating fully funded, defined benefit second pillar pension schemes that have consistently ranked high worldwide for delivering high replacement rates while featuring strong solidarity among members. Yet the long-term sustainability of the Dutch pension funds has been undermined in recent years by protracted low interest rates and unfavorable demographic developments, exacerbating controversies over intergenerational transfer mechanisms within the plans. This has prompted a national debate over ways to move toward more individualization while preserving financial security at retirement for all. This paper draws on this experience, illustrated by stress testing simulations and assessed vis-à-vis solutions implemented in peer countries, to discuss the main policy trade-offs associated with the reform of mature pension systems in advanced economies.

Keywords: WP; wage; interest rate; ratio; benefit; labor market; solvency; pension funds; defined benefit plans; defined contribution plans; fully funded; pension mathematics; stress tests; solvency ratio; fixed income; benefit indexation; rate of return; risk pooling; inflation shock; industry wage development; replacement function; indexation benefit; benefit curtailment; Pension spending; Pensions; Labor markets; Aging; Wages; Global (search for similar items in EconPapers)
Pages: 30
Date: 2019-01-25
New Economics Papers: this item is included in nep-age
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=46542 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2019/022

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().