Netspar papers on projected interest rates in DC schemes
The new Dutch legislation for DC pensions, which makes it possible to take investment risk in the retirement phases of DC schemes, went into effect on September 1, 2016. Netspar has written several reports for the Dutch Ministry of Social Affairs and Employment (SZW) related to this legislation. The most recent report was published by the ministry on December 15, 2016. Netspar researchers also wrote a number of other papers related to the new legislation that we are making available as a group.
All papers address the impact of the regulation of assumed interest rates through the so-called “projection rate and fixed decline” (which among others determine the level of the first distribution payment) and investments. The focus is on the prevention of re-distribution, but also on what is needed in order to achieve objectives such as a nominally stable distribution of pension wealth and the avoidance of a high risk of income reduction in the first benefit years. In addition, the papers discuss the impact of investments, projected rates and fixed declines in the expected benefits and the uncertainty therein. A (too) high projected rate, or (too) high fixed decline for instance implies a higher initial payment, but also to the deterioration of the life-long nature of the benefit.
For more information on how the different papers relate, please download this preface (only available in Dutch).
Research reports and background papers
- Research report ‘Projectierentes in verbeterde premieregelingen’. Lans Bovenberg, Theo Nijman en Bas Werker. Published by the Dutch Ministry of Social Affairs and Employment, May 2016. (Only in Dutch)
- Onderzoeksrapport ‘Herverdelingseffecten van verschillende projectierentes in verbeterde premieregelingen’. Johan Bonekamp, Lans Bovenberg, Theo Nijman en Bas Werker. Published by the Dutch Ministry of Social Affairs and Employment, December 2016. (Only in Dutch)
- ‘Welke vaste dalingen en welk beleggingsbeleid passen bij gewenste uitkeringsprofielen in verbeterde premieregelingen?’ Johan Bonekamp, Lans Bovenberg, Theo Nijman en Bas Werker (only in Dutch)
- ‘Variable Annuities in the Dutch Pension System‘, Anne Balter en Bas Werker (about the effect of interest rates and solid projection falls on the expected benefits and uncertainty in it, in case of individual risk allocation).
- ‘Personal Pensions with Risk Sharing: Various Approaches‘, Servaas van Bilsen, Lans Bovenberg (an extension to the case with micro-longevity risk, interest rate risk and inflation risk).