Pension funds in the Dutch second pension pillar are under severe pressure, due to indistinct, inadequate pension contracts and an aging society.Rigorous changes in fund design are necessary in order to release tensions between stakeholders within pension funds. This thesis elaborates a pension fund redesign that makes collective pension contracts explicit, complete, fair and sustainable, overcoming important flaws in current pension fund design.The core of the redesign is that pension rights within the fund are split up in different risk categories, called tranches. Plan members allocate their pension wealth over these tranches, dependent on their age in line with life-cycle preferences. Shocks in funding level are absorbed by the tranches according to a `waterfall construction’, in which the most risky tranche absorbs the first shock. More secure tranches are only affected when risky tranches are wiped out or filled up completely. To arrive at a fair fund design from theperspective of all stakeholders, we use options that make the embedded risk sharing within the pension fund explicit. Subsequent analyses gain intuition about the working of the redesigned pension fund. The thoughts and analyses in this thesis can serve as basis for factual redesign of second-pillar pension funds.

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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