What options are desirable from the participant’s perspective?

This paper examines the desirability or undesirability of new options for participants in the Dutch pension system, with a special focus on the so-called second pillar, or occupational pensions. We start by presenting a brief overview of the developments in terms of customization and options in pensions. We then move on to discussing the various options in order of the life cycle sequence: first, the choices regarding contributions, then those related to investment decisions, and finally the choices related to retirement and payout patterns. In each case, we start with a survey of the existing options under current regulations and the degree to which these are already used. This survey of options includes an examination of the major behavioral factors influencing the choices being made. Moreover, for some of the options, we explore how much participants might take advantage of them in theory and what advantages or disadvantages that might have for their own welfare. Both the costs and benefits of the options are thus analyzed.