Abstract
Corporate defined-benefit plans suffer from a number of serious weaknesses, including credit risk of the sponsor, ambiguous ownership of the surplus and back-loading of benefits. Also defined-contribution plans feature drawbacks. Individuals are not well equipped to make the complex financial decisions involved, transaction costs are substantial and various risks are not managed properly over the life cycle. Stand-alone collective pension schemes offer an attractive third way between corporate defined-benefit schemes and individual defined-contribution schemes. The members of the fund are the risk bearers and the funds manage risk aimed at providing an adequate income level during retirement at low costs. Dutch pension funds are evolving into such stand-alone pension schemes. Some directions for future reforms are sketched.
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This paper was prepared for the 64th congress of the International Institute of Public Finance, Maastricht, the Netherlands, August 22–25, 2008. The authors thank various participants and an anonymous referee for helpful comments on an earlier draft.
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Bovenberg, L., Nijman, T. Developments in pension reform: the case of Dutch stand-alone collective pension schemes. Int Tax Public Finance 16, 443–467 (2009). https://doi.org/10.1007/s10797-009-9108-1
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DOI: https://doi.org/10.1007/s10797-009-9108-1