EUROPE – Mandatory pension fund participation is the best guarantee for risk-sharing among generations, as shocks to contributions or rights adjustments will affect all participants equally, according to Roel Beetsma, macroeconomics professor at Amsterdam University.
Speaking during a conference organised by the Dutch Pensions Federation in Brussels on active ageing and inter-generational solidarity, Beetsma noted that such a mandatory setup would require "solidarity" and "fair burden-sharing".
Further, retirement age should follow life expectancy closely, "as this is the only way to ensure long-term sustainability".
He added: "Linking up with longevity also has additional macroeconomic benefits due to the increased labour supply, as well as higher tax revenues."
Else Bos, acting chief executive at PGGM, the €130bn pension services provider of Dutch healthcare scheme PFZW, argued that adopting a policy of active ageing for employees sooner rather than later not only benefitted individuals, but also society, communities, employers and collective arrangements.
She also pointed at the benefits of lower care costs as well as the social capital that healthy retired people can offer society.
Bos said PGGM could provide diagnostics to help employers applying best practices for improving the vitality of their workers.
She further referred to an initiative of PGGM, Rabobank and several healthcare insurers for a scheme deploying pensioners as volunteers for unpaid social jobs, which can earn them "care credits".
"We need to develop new thinking about the value of older people in society," she said.
Ole Beier Sørensen, chief of research and strategy at Danish pension fund ATP, pointed out that a policy for active ageing in Denmark was mainly a matter for the social partners, as well as for individual companies.
He advocated an improved balance between public and private pension plans, as the Danish compulsory second-pillar schemes of contributions and insurance-based hybrid DC arrangements do share risks and offer nominal guaranteed benefits, but cannot provide intergenerational solidarity.
As a consequence, younger participants are encouraged to save additionally for their pension through third-pillar plans, he said.
Similarly to the Netherlands, Denmark has decided to raise the retirement age from 65 to 67 and make the retirement age subject to longevity.
In addition, it has discouraged and curtailed early retirement and strongly encouraged longer employment.
"We have replaced the classic retirement agenda with a labour market agenda," Sørensen said.