The aim of this project is to learn lessons from other countries (New Zealand, Sweden and the UK in particular) and to find new insights on how pension design and pension taxation may increase the participation rates of workers in (supplementary) pensions in the Netherlands and contribute to the accrual of additional old-age income for those with inadequate coverage. This means that this project seeks to explore how pension design and tax treatment regulations can impact (supplementary) pension participation and accrual in the Netherlands.

 Setting the scene. In The Netherlands the statutory pension is called the ‘AOW’, which is a flat-rate state pension. All residents receive such an AOW-benefit. Occupational and individual pension schemes play an important role in the Netherlands in providing an additional old-age income alongside the AOW. Occupational pension schemes for employees are considered ‘quasi’-mandatory, as for the majority of the employees participation is obligatory under industrial wide pension agreements. However, not all employees have access to an occupational pension (DNB, 2022). In addition, the majority of the self-employed do not have access to such an occupational pension scheme for employees. Even though Dutch legislation allows occupational pension schemes under profession-wide agreements to be set up not only for employees but also for self-employed workers, this hardly ever happens in practice (OECD, 2019). Self-employed workers can also choose to participate in an individual pension scheme. Access to such a pension scheme is, therefore, voluntary.

(Supplementary) pension participation and accrual cannot be viewed separately from the labor market developments in each of the selected countries. Labor market reforms, resulting for example in an increase in self-employed workers, can pose new challenges regarding pension design and/or pension taxation. In the Netherlands, e.g., the self-employment rate has increased from 11% in 2000 to 17% in 2020 (OECD Data). In 2020, 94% of self-employed workers did not accrue occupational pension entitlements. Most of the self-employed workers did not compensate for this lack of occupational pension entitlements through individual pension savings and even if individual pension savings were accrued, this hardly solves the issue of the lack of occupational pension accrual (DNB, 2022). In that same period of time, about 13% of the employees did not accrue occupational pension entitlements (DNB, 2022). This clearly indicates that participation in and the accrual of occupational and individual pension entitlements raises important challenges.

 Main focus. The main focus of this study is on supplementary pensions. This means that not only occupational pensions, but also individual pension savings are the subject of study. Statutory pensions, however, will be included in the research if deemed necessary for the purpose of the research. To find insights on how pension design and tax treatment regulations can impact (supplementary) pension participation and accrual, a comparative study is being conducted. Four countries are involved in the study: the Netherlands, Sweden, New Zealand, and the United Kingdom. Furthermore, country-specific labor market developments that impact (supplementary) pension participation and accrual are taken into account.

This research is funded by Instituut Gak.