The Dutch Model of Sector-Wide Supplementary Pensions: Fund Governance, Finance and European Competition Policy

School of Geography Working Paper No. 00-03

34 Pages Posted: 22 Jun 2000

See all articles by Gordon L. Clark

Gordon L. Clark

Oxford University - Smith School of Enterprise and the Environment

Paul G. Bennett

University of Edinburgh - School of GeoSciences

Date Written: March 2000

Abstract

There is considerable interest in the design and funding of European pension systems. While many commentators emphasize the financial burden of under-funded European social security systems, less understood are the structure and performance of European supplementary pensions. In this paper, we introduce readers to the Dutch system of funded supplementary pensions focusing upon the governance structure of those pension funds in the context of European competition policy. From the early 1950s, the Dutch government has encouraged the development of employer-sponsored and industry-wide supplementary pensions, covering most employed Dutch workers. As the government has slowly discounted the real value of social security, supplementary pensions have come to play a crucial role in maintaining high levels of income replacement upon retirement. From an Anglo-American perspective, however, these pension institutions appear quite unusual. In many instances, firms are required to participate in sector schemes denying them the right to make separate arrangements with competing financial institutions. Moreover, many sector schemes are, in effect, mutually-owned financial conglomerates selling services to a captive internal market. Referencing the decision of the European Court of Justice in "Maatschappij Drijvende Bokken," this paper assesses the arguments for and against this model of pension provision. While sympathetic to the goals of national social solidarity, the underlying structure of governance unfortunately combines the risks of moral hazard with limited transparency and accountability.

JEL Classification: G23, G28, L33

Suggested Citation

Clark, Gordon L. and Bennett, Paul G., The Dutch Model of Sector-Wide Supplementary Pensions: Fund Governance, Finance and European Competition Policy (March 2000). School of Geography Working Paper No. 00-03, Available at SSRN: https://ssrn.com/abstract=228949 or http://dx.doi.org/10.2139/ssrn.228949

Gordon L. Clark (Contact Author)

Oxford University - Smith School of Enterprise and the Environment ( email )

South Parks Road
Oxford, OX1 3QY
United Kingdom
+44 1865 285197 (Phone)
+44 1865 285073 (Fax)

HOME PAGE: http://www.geog.ox.ac.uk/staff/glclark.html

Paul G. Bennett

University of Edinburgh - School of GeoSciences ( email )

Drummond Street
Edinburgh EH8 9XP
Scotland
(0131) 650 2518 (Phone)
(0131) 650 2524 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
338
Abstract Views
2,468
rank
111,732
PlumX Metrics