How to close the funding gap in Dutch pension plans? Impact on generations
AbstractPension plan sponsors in the Netherlands are facing their second funding challenge in the past decade, this one more severe than the first. Following the economic crash in 2008 - 2009, the funding levels of most plans fell below the 105 % threshold set by the Dutch supervisor, De Nederlandsche Bank, which requires recovery of the minimum funding ratio within five years. It is not yet clear, however, how plans will make up the deficits - except from profiting from a recovery of financial markets - and how the burden of any necessary adjustments will be spread among workers and retirees. Although earlier in the decade most Dutch pension plans were restructured to include automatic reductions in benefit indexation if funding drops below given thresholds, that mechanism may not be enough to achieve recovery this time around. Policymakers now have to consider more substantial measures, including contribution increases and nominal benefit cuts, actions few anticipated would be ncessary.
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Bibliographic InfoPaper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-4561530.
Date of creation: 2010
Date of revision:
Publication status: Published in Issue in Brief - CentER for Retirement Research (2010) v.10, p.1-6
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Web page: http://www.tilburguniversity.edu/
Other versions of this item:
- Eduard Ponds & Niels Kortleve, 2010. "How to Close the Funding Gap in Dutch Pension Plans? Impact on Generations," Issues in Brief ib2010-7, Center for Retirement Research, revised Apr 2010.
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- Niels Kortleve & Eduard Ponds, 2009.
"Dutch Pension Funds in Underfunding: Solving Generational Dilemmas,"
Working Papers, Center for Retirement Research at Boston College
wp2009-29, Center for Retirement Research, revised Nov 2009.
- Kortleve, N. & Ponds, E.H.M., 2009. "Dutch Pension Funds in Underfunding: Solving Generational Dilemmas," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3710341, Tilburg University.
- Ponds, E.H.M. & Riel, B. van, 2009.
"Sharing risk: The Netherlands' new approach to pensions,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-3129589, Tilburg University.
- Ponds, E.H.M. & Riel, B. van, 2007. "Sharing Risk: The Netherlands' New Approach to Pensions," Open Access publications from Tilburg University urn:nbn:nl:ui:12-387569, Tilburg University.
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