This thesis will be structured in the following way. Firstly, in Chapter 2, we will give a brief overview of the vigorous debate the move towards MTM liabilities has triggered among insurance companies, pension funds, academics, and policy holders by uncovering the most relevant arguments. Also the impact a change in the regulatory framework has on pension provider’s risk exposure, risk management and investment approach will be highlighted. Further, in Chapter 3, we will review the literature on disruptive change. Ultimately, it will allow us to gain deeper understanding of how difficult the disruptive shift from BV framework to MTM framework can be for insurance companies and pension funds. These challenges are technical but foremost of behavioural nature and therefore it makes sense to learn from other industries that also have faced disruptive change. In Chapter 4 we will concentrate on the significant impact a strong and credible regulatory enforcement may have on the behaviour when introducing a new valuation regime. As the core component of this chapter we will present the theoretical framework and the key findings of the Krugman exchange rate target zone model that will further be the main building block for the construction of the Solvency model further in the thesis. Chapter 5 will deal with the hypothesis and the research approach and in Chapter 6 we will present the Solvency model. Chapter 7 will fit the Solvency model to the empirical observations of the Netherlands, Sweden, and, depending on the results obtained, will draw conclusions about the accuracy of the hypothesis proposed in Chapter 5. Finally, Chapter 8 will conclude the thesis by providing policy recommendations.

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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