Report comment

The Dutch pension system has been one of the most sophisticated best managed in the world. It is sad to hear that it might be changed for an "individual" one.

The system is the victim of its own success. On one hand, seemingly, it can afford lower final pensions. On the other, for reasons outside the pension system, young people - and the economy in large - need more resources now. So the easy solution is to channel contributions of the young to housing. But give them higher accruals at the same time. Is it possible? And here comes in - in theory - the life cycle saving argument saying "yes".

But it is shown that fragmenting the portfolio leads lower investment performance in the long run. And there is something we are too shy to mention. Even if it was true that the young generations would gain by separating their portfolio from the older, then, the older generations would be worse off, in a zero sum "game" market.

Every individualised system has a feature which has to never forgotten: the Pareto optimum, that paying in less [contributions] will never result in the same level of pensions, should be clear from the beginning.

With regards