Pensions in the Netherlands: solidarity and choice

Opinions of working people on supplementary pensions

Like Japan, the Netherlands has an ageing population. As a consequence, the affordability of old-age pensions is under pressure. The labour market is also changing, with people more often changing jobs or choosing to become self-employed. Both trends raise the question of whether the pension system in its current form still meets the needs of working people today and in the future. The Dutch government recently put forward a number of initial proposals for modifications to the system.

The Dutch pension system consists of three parts: a basic state pension, a supplementary pension for which employees save through their employer and an (optional) individual supplementary pension. The proposed changes relate to the second of these components, namely (occupational) supplementary pensions. Under the present system, these pensions are based on the principle of solidarity: workers pay compulsory pension contributions through their employer and the collective capital accrued is used to pay all supplementary pension entitlements, both for people who are already retired and to meet the commitments in the long term. The Dutch Ministry of Social Affairs and Employment asked the Netherlands Institute for Social Research¦SCP to carry out a study of the support for solidarity in the Dutch supplementary pension system. Do working people still want to build up their pension in a collective system? What social trends are relevant here? Do employees prefer solidarity or choice? And to what extent do they express a preference for collective or individual pension schemes? In this report we answer these questions.