A large number of Dutch pension savers still trust the country’s system of solidarity and collective risk-sharing, despite those pushing for individual accounts being the most vocal, the CIO for Rabobank’s pension fund has suggested.
Bernard Walschots also predicted the eventual outcome of the current pension reform debate, led by state secretary for Social Affairs Jetta Klijnsma, would nevertheless be a shift away from collectivity.
“My feeling is the new pensions second pillar will meet calls for less collectivity and more individual pension accounts during the accrual stage of the entitlements,” he said while speaking at the second-annual pension funds in CEE conference in Prague.
“This would eliminate some of the most heavily criticised elements of the present system – namely, the uniform contribution rate [agreed for each pension fund] and the potential conflict between the young members and those that already receive a pension.”
He said any such changes would see the amount of regulation reduced, with the rules dictating the entitlements drawn from collective capital replaced with explicit, rather than implicit, benefits.
Any such changes would increase the number of collective defined contribution (CDC) arrangements, an option Rabobank has recently chosen for its own provision, in turn brought about by listed companies no longer wishing to have a defined benefit system on the balance sheet.
Walschots predicted the new Dutch pension system would see collectivity preserved when it came to the payout phase, with longevity and investment risk pooled across cohorts of retirees.
He said there was still support for solidarity within the pension system, despite a recent call by some for greater emphasis on individual retirement accounts.
“A lot of people in the Netherlands still adhere very much to our system,” he said of the collective, mandatory approach.
“Some of the more vocal people are more in favour of a more individualistic system in which there is also a lot of choice.”
However, Walschots dismissed the idea of choice, arguing that it increased costs.
He said that, in his experience from offering members investment choice, even those employed by a financial institution such as Rabobank were less inclined to avail themselves of such choice – with only around 10% of members opting away from the default investment option.