Wharton Pension Research Council Working Papers

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Working Paper

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The global financial crisis triggered a major redesign of the collective pension system in the Netherlands. The current Dutch system can be characterized as a defined benefit system with nominal guarantees, which are increased in line with inflation if investment returns are satisfactory. The crisis has shown that cuts in nominal benefits cannot be excluded because investment policy does not defend the nominal guarantees. In the redesigned contract, pension incomes depend more explicitly on the investment returns with lower guarantee levels that are defended in case of low investment returns. Allowing some individual choice with respect to risk taking is currently under discussion. As a side effect of adjusting the contract in the light of the financial crisis, funds no longer insure workers against systematic longevity risk during the accumulation phase. The chapter analyzes the pros and cons of these adjustments to the contract.


The published version of this Working Paper may be found in the 2012 publication: Reshaping Retirement Security: Lessons from the Global Financial Crisis.

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Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the authors and not those of the Wharton School or the Pension Resaerch Council. © 2011 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.

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Economics Commons



Date Posted: 28 June 2019