Netspar Brief 11: Survivor’s Pension No Longer Assured
Over the past few years, Dutch people have been saddled with greater personal responsibility for their own finances, pensions, and healthcare. Provisions for a good survivor’s pension have also increasingly come to rest on participants’ shoulders. The Surviving Dependents Act (Anw) has been drastically curtailed, so that only a small percentage of people still have a right to this benefit. The ensuing gap has only been partially, and in a highly fragmented manner, covered through pension schemes. This has given rise to a web of regulations that is impenetrable for participants. Moreover, both the labor market and the “relationship market” are increasingly mutable, and the resulting job changes, divorces or separations, and temporary unemployment statuses also affect people’s survivor’s pensions. This is not always actively communicated to people and many are therefore unaware of the financial risk.
Possible solutions are:
- Tying the survivor’s pension to overall salary, instead of only that part that is higher than the old-age pension exemption. This would decrease the risk for people with an income only slightly higher than the old-age pension.
- Introduce uniformity in survivor’s pensions for cases of death prior to retirement. For example, provide standard coverage – on a risk basis – based on a percentage of the last-earned salary. This would provide complete coverage, even in cases of unemployment, illness, disability, or insufficient years of employment.
- Provide clarity in cases where pension schemes do not have survivor’s benefits and offer access to voluntary alternatives without any barriers.
Download the summary of the Netspar Brief in English.
- The developments in the Netherlands related to survivor’s pensions were analyzed in a dedicated Netspar project group and the risks to participants surveyed. Major findings and recommendations from this study have been encapsulated in the paper “Nabestaandenpensioen. Versnipperde vormgeving vertroebelt risico’s“ (Survivor’s Pension: Fragmented Design Complicates Risks)
- More comprehensive information is available in the 11th Netspar Brief ‘Nabestaandenpensioen niet verzekerd.’ (Survivor’s Pension No Longer Assured)