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An Assessment of Alternatives for the Dutch First Pension Pillar System

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Listed:
  • Nick Draper
  • André Nibbelink
  • Johannes Uhde

Abstract

The ageing of the Dutch population, resulting in an increase in the number of retirees relative to the working population, has induced a debate about the sustainability of the Dutch first pillar pension scheme (AOW). This study explores possible alternatives for the AOW. A stochastic partial equilibrium model is used to study intragenerational insurance against longevity and productivity risk. The model shows the welfare, labour-market and saving effects of a shift from a Beveridge towards a Bismarck system in which pension rights depend on labour-market history. The main conclusion is that a shift of first pillar pensions from a Beveridge towards a Bismarck system is not necessarily welfare improving from an ex-ante insurance perspective, i.e. before the veil of ignorance is lifted. Moreover, a means test of the first pillar against wealth income, which implies a lower AOW when an individual has wealth income and a lower pension premium for everyone, does not improve welfare in the setting of the model considered in this study. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Nick Draper & André Nibbelink & Johannes Uhde, 2015. "An Assessment of Alternatives for the Dutch First Pension Pillar System," De Economist, Springer, vol. 163(3), pages 281-302, September.
  • Handle: RePEc:kap:decono:v:163:y:2015:i:3:p:281-302
    DOI: 10.1007/s10645-015-9253-0
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    References listed on IDEAS

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    More about this item

    Keywords

    Public pensions; Microeconomic risk; Welfare analysis; D61; H55;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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