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Third-pillar provision for Dutch self-employed ‘second-best’

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  • Ridderzaal, the Hague

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Encouraging Dutch self-employed workers to save into third-pillar pensions is only second-best to the launch of an industry-wide scheme using auto-enrolment, a Dutch academic has said.

Fieke van der Lecq also warned that the launch of a third-pillar pension option by APG risked cutting the number of workers who could eventually be enrolled into any new second-pillar option, reducing the opportunity to achieve the necessary scale.

Van der Lecq, APG professor of pension markets at the Erasmus School of Economics in Rotterdam, has repeatedly spoken out in favour of improved pension provision for self-employed workers – colloquially known as zzp’ers – but said she still favoured a second-pillar solution.

She said APG’s agreement with several groups representing the interests of self-employed to launch a third-pillar fund with what has been called “collective elements” was only second-best.

“The best solution would still be a second-pillar pension scheme for self-employed,” she said.

“It would be fairly easy to accomplish, but since the government, up to now, has not addressed that, I understand that initiatives are taking place to get it organised.”

She said the third-pillar solutions would only serve to dilute the pool of potential savers should a second-pillar solution occur.

“And then we are losing scale, which is my biggest concern,” she said.

“If you nibble away from the groups through these initiatives and through second-pillar funds that keep their former employees in the scheme, then you lose out on scale, and a second-pillar initiative will be unable to fly anyway.”

The academic, who was previously head of the financial sector division at the Dutch Competition Agency (NMa), told IPE recent soft compulsion reforms in the UK pointed towards how the second-pillar scheme could be established, and cited the opt-out figures seen by the National Employment Savings Trust (NEST) as proof the approach could work.

“Scale economies are everything in this sector, so you need to have a particular size, and, therefore, I favour automatic enrolment, but with an opt-out for those really against joining a scheme,” she said.

Unlike’s Van der Lecq’s emphasis on auto-enrolment, a recent survey by IPE sister publication IP Nederland found that 70% of respondents were in favour of mandatory pension saving for self-employed workers.

The academic added that the collective approach of the second-pillar schemes also offered benefits when it came to retirement, as the Dutch schemes pay benefits out of their own investment pool, rather than relying on an income drawdown system, as would be the case in a DC arrangement.

Details of APG’s third-pillar fund are still being decided, but it is believed that the DC administration arm of APG, Inadmin, will administer the scheme.

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