Dutch pensions savers have significantly lowered their pension target in the wake of the credit crisis and the financial problems in the pensions sector, a survey by a think tank has suggested.
Netspar – the Tilburg-based network for pensions researchers and professionals – said it had found that workers had down-sized the amount they expected to need at retirement by 12% on average, from €1,565 to €1,371 a month.
The Netspar researchers also concluded that the expected pensions income, forecasted by pension funds, had decreased even further. Between 2008 and 2014 the expected amount at retirement had dropped 17%, from €1,989 to €1,656, they said.
As both the pensions target and expected pension have fallen, the pensions gap – the difference between target and ultimate pension, has only slightly increased.
According to the Netspar research, the proportion of workers who are to receive less than their desired pension is now 26%, whereas it would have been 41% without the adjusted target.
Marike Knoef, researcher at Leiden University, said that the decrease in the “consumption floor” indicated that pension savers had reacted to the problems in the pensions sector.
“People have down-scaled their pension target all along the line, which is good.”
Knoef, however, noted that people’s expectations were not entirely aligned with their individual prospects, as also workers whose pensions position had not deteriorated had lowered their pension target.
The researchers had not only looked at future income from the state pension, occupational pensions and annuities, but had also considered savings, investments and surplus value of workers’ residential property as these could also be deployed for pension purposes.
Knoef said that high earners as well as the self-employed had on average, on a proportional basis, scaled back their pensions target more than workers had.
She added that the workers on a higher income had a pensions target that was relatively considerably lower than that of low earners, as the latter’s income lacked sufficient margin for a decrease.
In her opinion, it showed that the general assumption that a proper pension equated to 70% of the former salary was not a good principle to base policy on, “as this would be too little for certain individuals but too much for others”.
“The pension target should take people’s individual situation into account much more.”
In other news, a working group of the Actuarial Society (AG) concluded that a lower retirement age for the state pension would not work for people in physically demanding occupations without extra costs for the taxpayer.
In their election manifestor, several political parties had promised to introduce a flexible state pension age for workers in such jobs.
The AG argued that the current state pension payments already reflected the minimum subsistence level, and that the benefits discount as a result of early retirement would entitle the target group – usually on low income – to additional social security benefits.
The Dutch retirement age for the state pension age is to increase to 67 in 2021, and will further rise with longevity.