EconPapers    
Economics at your fingertips  
 

Explaining the growth of funded pensions: a case study of the Netherlands

Dirk Bezemer ()
Additional contact information
Dirk Bezemer: University of Groningen

No 213-2022, IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: Explaining the growth of funded pension systems is a major project in political economy. Drawing on the financialization and growth models literatures, this is a case study of recent pension fund growth in the Netherlands. Newly digitized data show almost continuous net fund inflows since their post-war inauguration, while since 2006 per-worker contributions have risen by half and annual costs, mostly investor remunerations, rose to almost a third of annual benefits. The ageing-based rationalization of investments is questioned based on demographic and pension fund data. The drawbacks of pension investments in terms of investment costs, macroeconomic volatility, loss of effective demand, and financial fragility are examined. Using the lens of the political economy of finance-led macroeconomic growth models, an alternative explanation for pension fund growth is developed. Post-2000 continued pension fund expansion in the era of managed money was financially necessary to cover investors' remunerations, and was a conduit for the investment of strongly rising international inflows. The costs of the funded system were obscured by the academic discourse on pension funds in terms of neoclassical models, treating pensions as financial assets. Since academia and policy are part of the same epistemic community, this fed into a policy discourse centered on continuous worries and painful reforms, leaving no policy space for consideration of alternatives to funded pensions. Insights from this case study have wider applicability to economies with funded pension systems.

Pages: 41 pages
Date: 2022
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.boeckler.de/pdf/p_imk_wp_213_2022.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.boeckler.de/pdf/p_imk_wp_213_2022.pdf [301 Moved Permanently]--> https://www.boeckler.de/pdf/p_imk_wp_213_2022.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:imk:wpaper:213-2022

Access Statistics for this paper

More papers in IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute Contact information at EDIRC.
Bibliographic data for series maintained by Sabine Nemitz ().

 
Page updated 2023-01-20
Handle: RePEc:imk:wpaper:213-2022