Self-Employment and Support for the Dutch Pension Reform

IMF Working Papers, March 19, 2019

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The Netherlands’ pension system is characterized by high participation rates, adequate retirement income, strong capitalization and sustainability.
Pressure points are arising due to population aging and untransparent intergenerational transfers inherent in the system.
The Dutch pension system needs to adapt to the changing labor market landscape with an increasing share of workers in self-employment not covered by any pension arrangement.
The government has proposed replacing collective defined-benefits schemes with personal accounts, and abolishing uniform premia and constant accrual rates.
The micro-data analysis shows that allowing greater risk-taking and freedom of choice in managing pension savings could crowd self-employed into pension schemes.

Allowing greater risk-taking in pension saving management may increase take-up of pension schemes among self-employed workers.
Increasing freedom of choice in how pension savings are managed has the potential to attract self-employed individuals who are currently without any pension arrangement.

Population aging is creating pressure on the current pension system.
Intergenerational transfers within the system are described as untransparent.
A growing share of workers in self-employment are not covered by any pension arrangement, requiring policy adaptation.

Replace collective defined-benefits schemes with personal accounts.
Abolish uniform premia.
Abolish constant accrual rates.
Expand options for risk-taking and individual choice in pension management to potentially increase coverage among self-employed.

Subject: Expenditure, Income, Labor, National accounts, Pension reform, Pension spending, Pensions, Self-employment
Keywords: Europe, Global, gross income, Income, income stream, investment risk, occupational pension, pension, pension contract, pension reform, Pension spending, Pensions, pillar pension schemes, result, risk, risk attitude, risk sharing, self-employment, self-employment status, WP

Source: IMF Working Paper "Self-Employment and Support for the Dutch Pension Reform", Working Paper No. 2019/064.