Overview: Netspar research on the pensions of self-employed

On October 4, the Dutch National Institute for Budget Information presented an advise to make
make it compulsory for self-employed people to save for supplementary (second pillar) retirement. In particular, (former) self-employed workers now face financial shortage at the end of their career. The Nibud report is based, among others, on Netspar’s research. Therefore, here is an overview of the research in question and more about self-employment pension.

Self-employment pensions; a puzzle

When it comes to the amount of pension and the desired retirement date, self-employed and wage-employed people share the same ambitions. However, a Netspar analysis shows that the self-employed often lack, for a large part, a mandatory occupational pension. Also they save too little voluntarily, have non-substantial business equity and are vulnerable in the housing market: The self-employment pension puzzle: Self-employed fail to fulfil their pension ambitions, Netspar Brief 7 (Mauro Mastrogiacomo 2016)

The paper Retirement savings adequacy of the dutch self-employed without employees (Kees Goudswaard, Marike Knoef, e.a. 2017) concludes in short:

• Large part of self-employed households have got a second pillar pension, however significantly smaller than employment households.
• The replacement rates of self-employed households (76%) are lower than employment housholds (83%)
• For low incomes there is not much difference between self employed or employers. The government retirement (AOW) is sufficient to maintain living standards.
• Assuming a replacement ratio of 70%, 43% of households with self-employed workers do not reach this standard (as expected), compared to 31% of households without self-employed workers without self-employed workers.

Compulsory savings, or not?

• People want less freedom of choice then expected: Netspar Brief 5 Pension freedom of choice (Henkens en Van Daalen, 2016)
• However, more flexibility in pension benefits offers advantages (Lever e.a. 2018)
• About choice and procrastination: The Psychology of Pension Choices, Netspar Brief 10, Henriëtte Prast, 2017)