Dutch reforms ‘flawed’, warns Ambachtsheer

The pension thought-leadership mantle held by The Netherlands has been called into question by the new Dutch pension accord, according to commentary in the latest Ambachtsheer Letter, which details perceived design flaws in the accord.The Ambachtsheer Letter, a periodic commentary piece by KPA Advisory Services’ Keith Ambachtsheer, questions the more practical elements of the reform implementation including the difficulty in establishing a ‘collective risk profile’ for a group of pension plan members who have very different risk profiles.

It also argues it is unrealistic to expect plan participants to understand the key elements of the pension deal, which is arguably more complicated than the old one.

Ambachtsheer, who is also director of the International Centre for Pension Management, details three specific concerns regarding the Dutch pension reform, and goes on to discuss how to overcome these.

He says the Dutch accord has two distinct pension system goals – affordable pension adequacy and strong payment surety – that require separate risk-taking and risk-shedding instruments.

TIAA-CREF in the US is an example of how this structure can work, he says.

If the Dutch occupational hybrid defined contribution/defined benefit system is to move towards a structure that offers separate risk-seeking and risk-shedding investment options, then setting investment defaults becomes an important part of pension design.

Connected with this is the growing importance of the quality of the data about individual members.

The Dutch pension reform outlines five goals, to be achieved through eight specific measures, and Ambachtsheer argues that some of those measures need to be changed if the accord’s “laudable goal of continued pension solidarity in the Netherlands is to be realised”.

The Dutch pension system has been ranked number one in the world by the Melbourne-Mercer Global Pension Index.

“When the Dutch decide to make major changes to their pension system, the rest of the world should pay attention,” Ambachtsheer says.

He also says the accord, which contains specific measures intended to enhance the efficiency, sustainability, fairness and transparency of its hybrid DC/DB pension plans, is worth studying to determine whether it is likely to achieve its goals, and the application to other systems.


For more information on the The Ambachtsheer Letter visit


A memorandum, by the organisation representing both employers and employees in the Netherlands, Stichting van de Arbeid, detailing the pension accord can be accessed here

Memorandum detailing the Dutch Pension Accord