Netherlands Snapshot

The Dutch have a low level of pension awareness

Dutch people don’t have a strong sense of responsibility regarding their pension provision, nor do they have much knowledge of the plan particulars, as reflected by survey respondents not knowing how much they had saved to-date, the level of contributions they make versus their employer, or what investment or drawdown choices are available to them.

The Dutch feel unprepared

Nearly two-thirds of Dutch respondents are not confident that they will be able to retire when desired or maintain their standard of living in retirement. Half of Dutch respondents are not confident that they will be financially prepared for retirement, questioning whether their pension benefit will stay at current levels and last over time. Together, these sentiments are furthering significant anxiety.  

Additionally, of the countries surveyed, the Netherlands reflects the greatest gap in estimating retirement income. When workers were asked what percentage of working income they think they will have access to in retirement, they significantly underestimated their pension benefit, assuming they will have to make do living on a third of their current income. Dutch retirees reported a much rosier reality, living on two-thirds of their working income in retirement. 

 

Opportunity for DC innovation

In the Netherlands, lifelong retirement income payouts and fixed benefits are mandatory. However, in 2016, changes were introduced into the regulatory framework that enabled more flexibility in benefit payouts. This relatively new array of retirement income options has not been fully embraced. In fact, of all people surveyed, Dutch respondents expressed the highest preference for their historical payout experience — a steady retirement income payout (42%).

However, even though doubt lingers among many Dutch people, current and planned reforms represent an opportunity for innovation.

Observing the challenges that face legacy DC models in other countries, some of which were established decades ago, the Netherlands is able to bring fresh thinking to optimizing DC scheme design. The new DC model is seeking to deliver a retirement savings structure that combines flexibility in the early years of retirement with fixed and predictable lifelong income later in life. Other planned enhancements include a high contribution level and nearly full participation by all workers. 

Disclosure

The views expressed in this material are the views of SSGA Defined Contribution as at April 30, 2018, and are subject to change based on market and other conditions.

State Street Global Advisors Netherlands, Apollo Building, 7th floor Herikerbergweg 29 1101 CN Amsterdam, Netherlands. Telephone: 31 20 7181701. SSGA Netherlands is a branch office of State Street Global Advisors Limited.  State Street Global Advisors Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom

This document contains certain statements that may be deemed forwardlooking statements. Please note that any such statements are not guarantees of any future performance, and actual results or developments may differ materially from those projected.

The information provided does not constitute investment advice as such term is defined under the Markets in Financial Instruments Directive (2014/65/EU) and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell any investment. It does not take into account any investor's or potential investor’s particular investment objectives, strategies, tax status, risk appetite or investment horizon. If you require investment advice you should consult your tax and financial or other professional advisor. All material has been obtained from sources believed to be reliable. There is no representation or warranty as to the accuracy of the information and State Street shall have no liability for decisions based on such information.

The information contained in this communication is not a research recommendation or ‘investment research’ and is classified as a ‘Marketing Communication’ in accordance with the Markets in Financial Instruments Directive (2014/65/EU) or applicable Swiss regulation. This means that this marketing communication (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research (b) is not subject to any prohibition on dealing ahead of the dissemination of investment research.  

Investing involves risk including the risk of loss of principal.

The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent.Diversification does not ensure a profit or guarantee against loss.

© 2018 State Street Corporation. All Rights Reserved.

D14362 2266168.3.1.GBL.RTL Exp. date: 31 October 2019