Researchers say DC more “individualistic”
EUROPE – Calling the shift to defined contribution pension schemes a move towards ‘individualisation’’, Dutch researchers have called for a ‘minimum level of collectiveness' in pension provision.
“Many existing occupational schemes are becoming less generous. Final salary schemes are being replaced by average wage schemes,” said Robbert van het Kaar and Marianne Grünell of the University of Amsterdam in a report.
“Arguably more importantly, employers are pressing for the replacement of defined-benefit systems by schemes based on defined contributions.”
“This entails a shift of risk away from the employer to the employees, and can be seen as a trend toward the individualisation of pension arrangements, even within the second pillar.”
They said the trend “might have adverse effects” on certain workers who currently find it hard to enter the occupational pension system.
And despite some measures to help such people, “entry to the core occupational system will not be made easier when these schemes become more individualistic in character”.
The study called for a “minimum 'level of collectiveness'” which “might arguably promote the inclusion of groups that at present find it hard to enter the system of collective occupational pensions”.
Van het Kaar and Grünell are part of the Hugo Sinzheimer Institute, a social science and legal faculty at the university which was established in 1989.