The impending reform of the Dutch pension system is seen by the pension sector as a way to create better pension outcomes for pension savers. Dutch workers, however, are not convinced. Some 50% of them expect lower pensions in a new defined contribution (DC)-based system, according to a survey by consultancy Montae & Partners.
The survey also found as many as 90% of workers is not aware of the upcoming pension changes that will shift risk from pension funds and employers to individuals.
“The new pensions system places more responsibility with the individual while in the current system members have no incentive to go deeply into the subject because they do not currently have any influence on their pension investments or risk profile,” noted Sander Baars, partner at Montae.
“As a result, most people are not a priori interested in the details of a new pension system,” he said.
Trust in pension adequacy has gradually come down as most pensions have not been indexed in the past 10 years. Two thirds of the 3,000 survey respondents expect to have sufficient pension income after retirement to continue their current lifestyle. Ten years ago, when Montae did a similar survey, this figure stood at 75%.
Interestingly, the question whether pensions should be collectively managed is completely irrelevant to a large segment of workers.
Almost half of workers has no preference for a collectively managed pension or an individual pension pot as the eventual pension result is what counts for them.
About 40% of respondents likens their pension to a car. They are not interested in the technique under the bonnet, as long as the car drives without issues.
Dutch workers are not completely agnostic about their pension, however. Regardless of age, three quarters of them find it important their pension is invested sustainably, even though most believe this should not go at the expense of returns, the survey showed.
Half of them want a maximum pension in the first place, with or without sustainable investments.
While pension funds should probably see the survey results as an encouragement to increase their efforts to make their investment portfolios more sustainable, there seems to be little room to increase risk going forward.
This is because most workers appear particularly risk averse, the research revealed. Under the new system, pension funds are required to measure the risk appetite of their members and adjust the investment policy accordingly. Workers aged above 45 are most risk averse: 60% of them has a low or very low risk tolerance.
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