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-a-vis solutions implemented in peer countries, to discuss the main policy trade-offs associated with the reform of mature pension systems in advanced economies.

• Cover
• CONTENTS
• ABSTRACT
• I. INTRODUCTION
• II. THE IMPACT OF THE CRISIS ON THE DUTCH PENSION FUNDS
  • Organization and size of the collective pension schemes
  • Financial developments of the pension funds over the crisis
• III. STRESS TESTING THE DUTCH COLLECTIVE PENSION SCHEMES
• IV. REFORMING MATURE SECOND PILLAR PENSION FUNDS: CHALLENGES AND PITFALLS
  • Current proposals in the Netherlands – Moving towards more individualization
  • Policy trade-offs – Ensuring long-term sustainability while preserving solidarity
• V. CONCLUSION
• VI. REFERENCES
• BOXES
  • 1: The new Financial Assessment Framework (nFTK)
  • 2: Notional DC Plans and Premium Accounts in Sweden
  • 3: Superannuation Funds in Australia
  • 4: Occupational Pension Plans in Switzerland
  • 5: The Supplementary Labor Market Pension Fund (ATP) in Denmark
• APPENDIX
  • Data sources and actuarial formulas