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Measuring retirement savings adequacy: developing a multi-pillar approach in the Netherlands*

Published online by Cambridge University Press:  06 November 2014

MARIKE KNOEF ,
JIM BEEN ,
ROB ALESSIE ,
KOEN CAMINADA ,
KEES GOUDSWAARD  and
ADRIAAN KALWIJ
MARIKE KNOEF
Affiliation:
Department of Economics, Leiden University and Netspar, 2311 ES Leiden, The Netherlands (e-mail: m.g.knoef@law.leidenuniv.nl)
JIM BEEN
Affiliation:
Department of Economics, Leiden University and Netspar, 2311 ES Leiden, The Netherlands (e-mail: m.g.knoef@law.leidenuniv.nl)
ROB ALESSIE
Affiliation:
University of Groningen and Netspar, Nettelbosje 2, 9747 AE Groningen, The Netherlands
KOEN CAMINADA
Affiliation:
Department of Economics, Leiden University and Netspar, 2311 ES Leiden, The Netherlands
KEES GOUDSWAARD
Affiliation:
Department of Economics, Leiden University and Netspar, 2311 ES Leiden, The Netherlands
ADRIAAN KALWIJ
Affiliation:
Utrecht University School of Economics and Netspar, P.O. Box 80125, 3508 TC Utrecht, The Netherlands
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Abstract

The Dutch pension system is highly ranked on adequacy. These rankings, however, are based on fictitious replacement rates for median income earners. This paper investigates whether the Dutch pension adequacy is still high when we take into account the resources that people really accumulate, using a large administrative data set. A comprehensive approach is followed: not only public and private pension rights, but also private savings and housing wealth are taken into account. Summed over all age- and socioeconomic groups we find a median gross replacement rate of 83% and a net replacement rate of 101%. At retirement age, 31% of all households face a gross replacement rate that is lower than 70% of current income. Public and occupational pensions each account for more than 35% of total pension annuities. Private non-housing assets account for 14% and imputed rental income from net housing wealth accounts for about 10%. Some vulnerable groups, such as the self-employed, have below average replacement rates. Results are fairly similar to results found in the UK, indicating that we should be careful in evaluating the adequacy of pensions systems on the basis of fictitious replacement rates.

Keywords

D14D31J32H55pensionssavingswealthretirement.
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 15 , Issue 1 , January 2016 , pp. 55 - 89
Copyright
Copyright © Cambridge University Press 2014 

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Footnotes

*

This project is a part of an international comparative study regarding Retirement Savings Adequacy organized by the OECD. We thank Netspar and Instituut Gak for financial support. Furthermore, we are indebted to anonymous referees, Pablo Antolín, Roel Beetsma, Lans Bovenberg, Flavia Coda Moscarola, Frank den Butter, Elisabeth Eenkhoorn, Ben Geurts, André Knottnerus, Sylvia Kok-de Vries, Stéphanie Payet, Harry ter Rele, Lou Spoor, Raun van Ooijen, Eduard Ponds, Arthur van Soest, Daniel van Vuuren, Mathijn Wilkens, and Juan Yermo for providing us with valuable comments.

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