Historically low birth rates in Europe have major implications for the economy and in particular for pensions. At an average of 1.6 children per woman (as low as 1.4 in the Netherlands), fertility is now well below the level needed for a constant population. Currently, natural population growth in Europe is already negative but this is compensated for now by strong net immigration. Exploring this demographic trend on pensions is of great importance. Indeed, it may affect pensions in the Netherlands in several ways:

  1. Further aging may weaken the support base for (risk sharing in) pensions.
  2. Low economic growth puts pressure on interest rates.
  3. Within Europe, tensions may arise between pay-as-you-go versus funded countries, possibly resulting in higher inflation and lower real interest rates.
  4. Low population growth may have a restraining effect on Europe’s economic growth and competitiveness.

This project examines the possible effects of low population growth in the Netherlands and analyzes its significance for the Dutch pension sector. It also discusses options to respond to the possible consequences of low population growth and a possible ‘population implosion’.