Occupation-based life expectancy: towards actuarial fairness of determining future statutory retirement age
Various policies affect actuarial fairness of pension systems. Bonenkamp & ter Rele (2013) find a Matthew effect in the Dutch 2ndpension pillar due to differences in life
expectancy, whereas the tax-based funding of the 1st pillar entails a stronger reversed redistribution. Characteristics of 2nd pillar pensions affecting actuarial fairness include build-up of pension entitlements (DB, DC and NDC schemes are differently affected by differences in life expectancy), modes of payout (lump-sum, rate or annuity pensions), and organisation of pension schemes (sectoral pension schemes could account for sectoral differences in life expectancies).
A comparison of the Danish and Dutch pension systems would be relevant in this regard. Both countries have a similar basic setup with a public basic pension based on residence, and largely sector-organised second pillar pensions. However, Danish occupational pensions are much more flexible (Goul Andersen, 2011).Dutch pension schemes face limitations in terms of, among others, payout modalities, accrual rates and a national ‘target pension age’, which may eliminate possibilities for (sectoral) pension funds to adapt pensions to sectoral differences in life expectancies.