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.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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