Inquire Europe and Netspar recently held a joint program exploring the transformation of the Dutch pension system: “Navigating The Dutch pension Reform”, featuring Bas Werker and Joost Driessen from Netspar and Tilburg University. The session explored the challenges and opportunities surrounding the ongoing transformation of the Dutch pension landscape. Participants discussed key insights from research and industry experience, with a focus on the practical implications of reform for investment strategies, risk management, and long-term financial planning.
Werker opened the floor by introducing Netspar, a “Dutch research network that connects universities, regulators, and pension funds to promote a scientifically grounded pension debate”. He explained that while the Netherlands has long ranked among the world’s strongest pension systems, persistently low interest rates and intergenerational imbalances revealed structural weaknesses in the DB model. The new pension law converts existing DB entitlements into individual DC accounts — an unprecedented move that changes how risk and return are shared.
At the heart of the reform is the “solidary DC scheme,” which preserves collective risk sharing but adjusts returns so that income, rather than wealth, fluctuates equally across generations. Werker highlighted both the strengths of this approach and its complications, particularly the use of “solidarity reserves” meant to stabilize payouts but which may amplify losses when buffers run dry. Transparency, he stressed, is vital: “You cannot eliminate risk — only decide how to share it.”
Driessen’s presentation focused on the scenario sets used by the Dutch Central Bank to model future pension outcomes. These sets — 100,000 simulated economic paths recalibrated quarterly — underpin communication, regulation, and fund valuation. His research showed that frequent recalibration can cause large swings in long-term projections, complicating communication with participants. He suggested improving stability by reducing reliance on short-term market data, acknowledging model uncertainty, and fostering open dialogue between regulators and funds:
“Another thing that we talk about is to really try to acknowledge model uncertainty and estimation uncertainty more, so we see these numbers that are given essentially in the communication or the pension fund calculates, and we know, especially if you’re young, that there’s lots of uncertainty around these numbers.”
A sustainable pension reform depends on clear communication, academic rigor, and trust between generations.