Ongoing reforms have led to distrust in Dutch pensions
Written by Sunniva Kolostyak
Dutch people do not have trust in their pension system, scoring lowest on a State Street Global Advisors (SSGA) report on pension happiness, after years of reform debates.
According to The Global Retirement Report: The Happiness Formula, which focuses on DC schemes in eight countries Germany, Italy, Netherlands, Sweden, Ireland, UK, US and Australia, Netherlands scored the lowest, with only 2.1 points out of a possible 5.
According to the OECD's Pensions at a Glance 2017, Netherlands was at the top of the spectrum of retirement savings adequacy, scoring 180 per cent compared to 150 per cent for second place US and 8 per cent for last place Germany.
The report, which was discussed at the SSGA defined contribution ‘happiness’ conference in London, defines the happiness formula as a combination of trust, ownership and preparedness, of which Netherlands scored last in the first two and third last on the latter.
In the report, SSGA said: “[Netherlands] has strong assets and a well-developed pension system, but is experiencing a savings model transition that’s created a low sense of ownership and a sombre outlook. We expect that once reforms are implemented, the Netherlands will more closely resemble Sweden.”
Sweden scored second highest on the happiness score, with 3.9, only beaten by the US’ 4.1. The UK scored slightly higher than the Netherlands, with 2.4.
SSGA senior pensions strategist Jacqueline Lommen told European Pensions that young people in particular are distrusting of the Dutch system as reforms have been an ongoing debate for over a decade.
“Being prepared is well taken care of in Netherlands. We save actually too much, we’re even lowering fiscal incentives now,” she noted. The other two dimensions however, trust and ownership, have been issues for 15 to 20 years.
“We are amidst reforms for many, many years already, and we see in the public debate that all the parties are out there commenting on everything, so the people feel that something is not right, something has to change, and they don’t see the result, they don’t see the compromise. So the trust is very low in the Netherlands.”
“In the Netherlands we are used to DB pension plans traditionally, and they have done well in the past, now they do a bit less, they are underfunded. But people have no means to influence themselves, they have no information, they have hardly any choice. They cannot change their own situation,” Lommen said.
SSGA global head of strategy Nigel Aston said: “Netherlands scores very highly on the objective studies always. But if you ask people, particularly if you ask young people, they don’t think it’s going to be there when they get to retirement.”