The Netherlands: Adapting a Multipillar Pension System to Demographic and Economic Change

Abstract

The Netherlands departed from the Bismarckian social insurance tradition by combining flat-rate public basic pensions with quasi-mandatory, funded occupational pensions with near universal coverage. The emergence, expansion, and reorganization of occupational pensions show their close integration with the public pension scheme. Many efforts helped expand and improve coverage through collective agreements by employers and trade unions. Short case studies of pension funds in the public and private sector highlight the core features of the Dutch system as well as its institutional variation. In the wake of the financial crisis, occupational pensions were scaled back since these defined-benefit (DB) pensions were threatened by underfunding. Current debates question the future viability of the Dutch system in an era marked by both demographic ageing and volatile financials.