A new legislation in the Netherlands makes it possible for participants in DC pension schemes to invest in risky assets after retirement. This thesis considers several aspects of both the investment policy as the pension benefi t payment policy in DC pension schemes. First of all, the design of the life-cycle before retirement is investigated. A decreasing life-cycle is preferred above a constant life-cycle. Moreover, the optimal amount of investment risk heavily depends on the risk preferences of the participant: an inadequate average equity exposure can lead to sizeable welfare losses. Furthermore, the influence of the assumed interest rate (AIR) and the e ffect of fi nancial smoothing on the development of the pension benefi t level during retirement is investigated. In case of financial smoothing,a decreasing life-cycle is preferable to prevent an increased amount of investment risk at high ages. Moreover, participants should be aware that financial smoothing around the risk-free rate in combination with the expected return as AIR leads to a high probability of a decrease in the pension bene fit level during the first years after retirement. A horizondependent AIR can prevent this undesirable eff ect.

Netspar, Network for Studies on Pensions, Aging and Retirement, is een denktank en kennisnetwerk. Netspar is gericht op een goed geïnformeerd pensioendebat.

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