THE NETHERLANDS - DNB, the Dutch Central Bank, has reported that 50% of all active employees, with pension arrangements with insurers are on a defined contribution(DC) basis. At the same time, the DNB indicates that  only 3% of employees with benefits through pension funds are DC.

According to DNB, employers most favour DC since practically all the risk is placed on the shoulders of employees. Most pension funds in the Netherlands currently provide DB, whether final-salary or career-average arrangements.

When it comes to individual pension arrangements provided by insurers, only 20% of those covered are on a DB basis.

The DNB also reported that these individual pension arrangements are in general quite restricted. In its latest published Statistical Bulletin, the bank noted most pensioners with insured arrangements did not have any additional benefits, such as providing pensions to next of kin.

At the end of 2005, 46,000 collective pension arrangements covering 886,000 employees had been  arranged through insurance companies, while pension funds membership accounted more than 6,225,000 employees.

The DNB  said that most pension arrangements insured directly with insurance companies are being set up by small to medium-sized companies. Total direct insured pensions assets have increased to €31.2bn  in 2005, an 11% increase in comparison to 2000. Total pension fund assets reached €450bn.

The bank commented that current developments in the pension sector are largely the result of employers reassessing their positions. The risk factor, largely caused by new accounting rules, has forced employers to reconsider DB arrangements, pension fund alliances and other options.

DC insured arrangements currently seem to be popular, as it puts much of the risk onto employees, leaving the former sponsoring company out of the equation. The risk factor has also pushed pension funds into adopting career-average salary  benefits.