T.A.H. (Dick) Boeijen (1977) studied Technical Mathematics and Actuarial Science and works as an actuarial officer at PGGM.

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1 About the authors K. (Karin) Aarssen (1968) works at the Financial & Risk Policy Department of ABP Pension Fund, focusing on pension policy and risk management. She studied Operations Research at the Erasmus University and Actuarial Science at the University of Amsterdam. After graduating she worked at KPMG Brans&Co (now: Watson Wyatt) and ING Group. J.A. (Jacob) Bikker (1952) is senior scientific researcher at the Supervisory Policy Division of DNB (Dutch Central Bank). He obtained a PhD in Econometrics and performs research in the fields of banks, insurance, pensions, financial market competition, financial institution efficiency, regulatory procyclicality and risk management. T.A.H. (Dick) Boeijen (1977) studied Technical Mathematics and Actuarial Science and works as an actuarial officer at PGGM. C.G.E. (Guus) Boender (1955) studied Business Econometrics at the Erasmus University Rotterdam and obtained a PhD at the same university. He is currently Professor in Asset Liability Management at the Free University Amsterdam and Director at ORTEC. At ORTEC he shares responsibility for ALM, strategic asset allocation, risk management and performance attribution which ORTEC performs at pension funds, insurers and housing corporations. J.P.M. (Jan) Bonenkamp (1979) works as a research officer at the Labour Market and Welfare State Sector of the CPB Netherlands Bureau for Economic Policy Analysis. In this capacity he focuses mainly on pension and ageing issues. Jan studied General Economics at the University of Groningen. A.L. (Lans) Bovenberg (1958) studied Econometrics at the Erasmus University Rotterdam and obtained his PhD at the University of California, Berkeley. Bovenberg is currently Professor in Economics at the University of Tilburg. In 2003 he won the Spinoza Prize, the most important science award in the Netherlands. He used the prize money to set up Netspar, a private-public knowledge network on pensions, ageing and retirement.

2 238 About the authors Bovenberg started his career at the International Monetary Fund, worked as policy officer at the Ministry of Economic Affairs and as Deputy Director at the CPB Netherlands Bureau for Economic Policy Analysis. He also held the position of Scientific Director of the Center for Economic Research (CentER) at the University of Tilburg. Bovenberg mainly publishes on public finance and taxation, but also carries out research in other fields, including environmental, macro, institutional and financial economics. J. (Jan) de Dreu (1981) wrote this chapter while working at the Supervisory Policy Division of DNB (Dutch Central Bank). His research interests include pension fund investment policy, lending technologies of microcredit institutions and the interaction between deposit insurance and market discipline. Since September 2006 Jan de Dreu has been working at ABN AMRO. P.J.A. (Peter) van Els (1959) is departmental head of Economic Research at the Economics & Research Division of DNB (Dutch Central Bank). He studied General Econometrics and Mathematical Economics at the University of Tilburg and has worked since 1986 in various positions within the research environment of DNB. In 1995 he obtained his PhD at the University of Amsterdam. His research specialisation covers macroeconomic modelling, monetary transmission and household financial behaviour. R.P.M.M. (Roy) Hoevenaars (1978) is senior portfolio manager at the global tactical asset allocation fund of ABP Investments. Previously, he was head ALM modelling and senior researcher ALM at the Financial and Risk Policy Department of ABP Pension Fund. He was researcher at the Research Department of ABP Investments in the field of strategic asset allocation, ALM and quantitative equity models. Roy is also affiliated to the University of Maastricht where he is finalizing a PhD dissertation on strategic asset allocation and ALM. He studied Econometrics and Operations Research at the University of Maastricht. S. (Sacha) van Hoogdalem (1970) studied Business Econometrics at the Erasmus University Rotterdam and is currently Director at ORTEC. She focuses mainly on ground-breaking ALM studies in the pension sector. She also carries ultimate responsibility for ensuring that the ALM models are adequate for obtaining more insight into ALM issues in theory and practice. C. (Corné) Jansen (1978) studied Econometrics and works as actuarial officer at PGGM.

3 About the authors 239 P.P.T. (Patrick) Jeurissen (1969) is senior health care analyst at the Council for Public Health and Care. His work centres on financial-strategic issues in the healthcare sector. He is particularly interested in financing and distribution issues as well as in the development of the difference between for-profit and non-profit institutions. He is also preparing a thesis on this subject. He studied Public Administration at the Erasmus University Rotterdam, specialising in public finance. C.E. (Niels) Kortleve (1965) studied Econometrics and is currently Actuarial Projects & Special Accounts Manager at PGGM. B.J. (Barthold) Kuipers (1972) works at the Financial & Risk Policy Department of ABP Pension Fund. He focuses on the policy, strategy and risk management of the pension fund. Previously he worked at CPB Netherlands Bureau for Economic Policy Analysis. He graduated in Econometrics at the University of Amsterdam. J.B. (Jan) Kuné (1946) is senior researcher at Stichting Pensioenfonds ABP and part-time Professor in Pension Actuarial Science at the Economics Faculty of the University of Amsterdam. Kuné started his career at the Europa Institute of the University of Amsterdam in In 1970 he joined DNB (Dutch Central Bank). In 1975 he accepted a post at the Royal Tropical Institute and worked as an epidemiologist in Indonesia and Kenya. In 1978 he returned to the University of Amsterdam where he carried out his PhD research and also lectured in Pension Actuarial Science. Since 1988 he has worked for ABP where (the introduction of) an adequate funding methodology was long his main task. Since 2003 he has again been attached to the University of Amsterdam as part-time Professor in Pension Actuarial Science. S.G. (Fieke) van der Lecq (1966) took degrees in Economics and Business Economics at the University of Groningen where she obtained her PhD on a thesis in monetary economics. After appointments at the Ministry of Finance and the CPB Netherlands Bureau for Economic Policy Analysis, she was editor-in-chief and publisher of ESB, a journal for economists, as well as director of the ESB publishing house. Alongside her other current affiliation, she works 1 day a week as associate faculty at the Economics group of the Erasmus University Rotterdam. Th.E. (Theo) Nijman (1957) is Professor in Econometrics of the Financial Markets as well as Professor in Investment Theory on the F. Van Lanschot Chair. Both Chairs are at the University of Tilburg. Theo is chairman of the

4 240 About the authors Scientific Board of Netspar ( He is also Scientific Director of the Tilburg Center of Finance and Academic Coordinator of Inquire Europe, the European meeting forum for science and institutional asset managers. Theo Nijman obtained his PhD in 1985 at VU University Amsterdam. Since then he has been in the employ of the University of Tilburg, including five years as researcher of the Royal Netherlands Academy of Arts and Sciences. Theo has been involved in more than ten theses as PhD supervisor. During the period Theo was Scientific Director of CentER, the research institute of the Tilburg Economics Faculty. P.H. (Pieter) Omtzigt (1974) is member of the House Of Representatives Of The Dutch Parliament for the Christian Democratic Party and is attached to the Faculty of Economic Science and Econometrics of the University of Amsterdam. In the House Of Representatives he is spokesman for, among other things, public and private pensions and the new healthcare system. E.H.M. (Eduard) Ponds (1958) has worked for ABP since 1995 at, successively, the Actuarial Department, Asset Research, and currently the Financial and Risk Policy Department. In addition, he is affiliated with Netspar. At ABP he is engaged in projects on pension plan design, ALM and risk management. Before joining ABP, Eduard worked at the University of Tilburg and the Open University. He graduated in Economics. In 1995 he obtained his PhD entitled: Supplementary pensions, intergenerational risk-sharing and welfare. Since September 2007 he is part-time Professor in Economics of Collective Pension Plans at the University of Tilburg. M.C.J. (Maarten) van Rooij (1970) works as researcher at the Economics & Research Division of DNB (Dutch Central Bank) and is affiliated to Netspar. He graduated in Econometrics at the University of Tilburg, specialising in Monetary Economics, General Econometrics and Operational Research. Currently, he is writing a PhD-thesis on the financial behaviour of households. F.B.M. (Floris) Sanders (1958) is radiologist at the Diakonessenhuis Utrecht Zeist Doorn Hospital. He has held many administrative posts in the healthcare sector. From 1997 tot 2000 he was chairman of the Order of Medical Specialists, and from 2002 to 2005 he was chairman of the Council for Public Health and Care, an important advisory body of the Minister of Health, Welfare and Sport. His particular interests are issues relating to the (financial) viability of collective insurance schemes in the healthcare sector.

5 About the authors 241 He is currently a member of the Supervisory Boards of the Erasmus MC and of Altrecht, a large mental healthcare institution. He fulfils positions in the Executive Committee of the NIVEL research institute and in the programme committee on demand-based delivery of ZonMw. In addition, he fulfils various advisory positions, including membership of the Advisory Council of Health Insurers in the Netherlands. M.E.J. (Margreet) Schuit (1967) works as policy officer at the Supervisory Strategy Department of DNB (Dutch Central Bank). She studied Economics at the University of Amsterdam, specialising in Monetary Economics, General Economics and Econometrics. After graduating in Economics she focused on various subjects including compensation & benefits policy (in the employ of the FNV trade union) and in recent years mainly on pension policy. O.W. (Onno) Steenbeek (1967) is head of Corporate ALM and Risk Policy at ABP Pension Fund since Onno studied Financial Economics and Modern Japanese Studies at the Erasmus University in Rotterdam, where he also obtained his PhD in finance. In 2001 he joined ABP Investments as senior strategist, until he switched over to the Financial and Risk Policy Department of ABP Pension Fund in He is affiliated with the Department of Finance of the Economics Faculty of Erasmus University for one day a week. J.H. (Jan) Tamerus AAG (1953) studied Actuarial Science, is internal actuary at PGGM and Director of the Corporate Actuarial Services & ALM Department. M.E.A.J. (Martijn) van de Ven (1966) works as a research officer at the Labour Market and Welfare State sector of the CPB Netherlands Bureau for Economic Policy Analysis. His work centres on pension and ageing issues. Martijn studied Econometrics at the University of Tilburg, where he obtained his PhD in 1996 with a thesis about political decision-making on intergenerational redistribution. E.W.M.T. (Ed) Westerhout (1965) is programme leader in Ageing and Pensions at the Labour Market and Welfare State sector of the CPB Netherlands Bureau for Economic Policy Analysis. Ed studied Economics at the University of Tilburg and obtained his PhD in 1997 at the University of Amsterdam on a thesis about imperfect substitution on capital markets, capital gains tax and the EMU. In earlier positions at the CPB Netherlands Bureau for Economic Policy Analysis he focused on e.g. healthcare, disability and the labour market. In addition, he lectured for many years in General Economics at the University of Amsterdam.

6 Subject index A access to healthcare 46 adverse selection 37, 39, 67, 69, 71, 82, 85, 153, 210 annuity 63, 64, 67, 69, 70, 74, 76, 83 85, 153, 163, 168, 181, 191, 210 Asset Liability Management 96, 100, 102, 104, , 112, 114, 115, 239, 240, 242, 243 average-wage system 26, 31, 121, 215, , 233, 236 B behavioural finance 146, 160, 168, 182 blank spots 162, 187, 188, 234 C catch-up contributions 22, 84 87, 90, 120, 121, 212, 215, 220, 222, 225 catch-up indexation 21, 97, 142 cold solidarity 4, 147 collective contracts 52, 63, 65 67, 70, 89, 91, 161, , 182, 183 Collective Defined Contribution (CDC) system 58, 107, , 211, 223, 224 company pension fund 51, 54 58, 60, 73, 161, 188, 189, 192, 199, 200, 212, 231 contribution rate 25, 27, 30, 95, 96, 104, 108, , 115, 119, 121, 129, 137, 145, 146, 153, 209, 212, 214, , 225 actuarially fair 138, , 150, 151, 155, 214, contribution volatility 75, cost differences 52 54, 57, 61, 62, 71, 231 costs administration 53 61, operation 51 53, 55, 57 61, 71, 152, 231 coverage rate 183 D decreasing accrual system 119, Defined Benefit (DB) system 2, 52, 56 59, 66, 84, 90, 107, , , 175, 207, 210, 223, 224

7 244 Subject index Defined Contribution (DC) system 2, 26, 34, 52, 56 59, 77, 90, 113, 128, 164, 166, 167, 169, 174, 176, 207, deflators 95, 99 direct schemes 62, 66 disability 7, 31, 91, 138, 141, 143, 144, 146, 147, 192, 194, 200, 244 discontinuity risk 213 discount rate 21, 30, 32, 87, 90, , 102, 108, 214, 215 stochastic (deflators) 99, 100, 102 distribution mechanism 16 E economies of scale 2, 36, 45, 46, 52, 54, 55, 58, 60, 61, 63, 70, 71, 138, 152, 155, 193, 199, 200, 211, 231, 236 employer matching contributions 169 endowment insurance policies 63, 64, 69, 70, 74 equivalence principle 37 ex-ante solidarity 17, , 214, 230 explicit pension contract 102 ex-post solidarity , 214, 230 F fair value 78, 90, 215 final-wage system 32, 66, 107, 112, 139, 140, 152, 230 Financial Assessment Framework (FTK) 22, 68, 196, 221 financial illiteracy 170, 177 financial planning 160, 168, 170 first pillar pension 1, 14, 16, 19, 30, 37, 38, 82, 139, 162, 164, 166, 180, 193, 206 flexible retirement age 90 framing 169 frayed-edge theory 135 funded pension system 16, 33, 45, 122, 159, , 199, 220, 232 G generational accounting 20, , , 109, 110, 112, 115 H heterogeneity 91, 211 horizontal solidarity 13 Household Survey 171, 173, 176, 178 human capital 76, 79, 81 83, 85, 86, 89, 90, 235 I income solidarity 37, 39, 43, 206 incomplete capital markets 80, 84, 210 indexation 13, 21 23, 30, 66, 67, 78, 83, 86, 88, 91, , , 121, , 154, 177, 192, 193, 207, 208, 212, 215, 220, 222, 225 conditional 97, 115, 121 unconditional 107,

8 Subject index 245 indexation policy 21, 22, 95, 104 individual arrangements 13, 32, 236 individual pension scheme 52, 63, 71, 159, 163, 165 individualisation 42, 46 industry-wide pension fund 30, 51, 54, 56 62, 71, 73, 95 97, 104, 115, 116, 119, 121, 139, 161, 162, , 192, 193, 195, 199, 200, 211, 212, 231 inertia 168 informal care 36 insurance company 45, 60, 62, 63, 66, 74, 80, 84, 138, 153, 155, 166, 190, 199, 231 intergenerational risk sharing 96, 154, 206, 208, 210, 211, 213, 214, , 226 intergenerational risk trading 85 intergenerational solidarity 19, 20, 26, 38, 39, 41, 43 45, 102, 120, 121, 126, 192, , 213, 214, 225 investment policy 7, 78 81, 107, 109, 116, 167, 223, 231, 236, 240 J John Rawls 35 L labour market distortions 59, 90, 205, 206, 211, 212, labour mobility 85, 128, 200, 232, 235, 237 libertarian paternalism 167 life expectancy 18, 31, 45, 67, 137, 143, 146, 151, 153, 154, 191, 199, 210, 224, 236, 237 life insurance policy 63 life-course savings scheme 160, longevity bond longevity risk 66, 68, 83, 85, 89, 91, 199 M mandatory participation 8, 28, 30, 66, 67, 70, 85, 152, 155, , 171, 172, , , 197, 199, 200, 209, 211, 213, 223, 230, companies 160, 161, 187, 189, 197, 199, 200, 234 indirect 163 individuals 160, 161, 189, 190, 194 mental accounting 168 misselling scandal 166, 191 moral hazard 18, 32, 37, 82 mutual subsidies 124, , 135 myopia 168, 169, 182 N net benefit no-claim rebate 34, 38, 40, 43, 46 O old age pension 140 outsourcing 51, 52, 59, 60, 63

9 246 Subject index P pay-as-you-go 16, 38, 40, 44, 46, 95, 122, 135, 159, 164, 193, 198, 199, 220, 232, 237 pension basis 139, , , 153, 155 defined 145 pension benefit guarantee corporation (PBGC) 198 pension contract 13, 22, 25, 75 78, 81, 82, 84 86, 90 92, 96, 97, 99, 101, 103, 106, 207, 208, 222, 231 pension-cum-health policies 45 perverse solidarity 20, 30, 31 policy ladder 91, 101, 104, 111, 116 procrastination 168, 172, 175, 182 professional group pension fund 1, 56 58, 61, 63, 71, 162, 231 profit margin 65, 68, 70, 71, 231 progressive contribution system Q quasi-mandatory participation 161, 163, 165, 182, 183 R reciprocity 13, 14, 20, 41, 42, 44, 123 recovery period 19, 22, 68 redistribution 16 18, 30 32, 44, 46, 95, 107, 134, 137, 138, 145, 147, , , 188, 205, 206, 209, 214, , 233, 243 reinsurance 51, 59 61, 66, 70 representative participants 8, 233 risk aversion 35, 79, 91, 99, 102, 174, 224 risk sharing 2 6, 15, 18, 28, 29, 39, 75, 77, 78, 80, 82, 84, 85, 91, 96, 130, 154, 192, 200, 205, 210, 220, 222, 223, 226, 229, 230, 232, 234, 235, 242 risk solidarity (risk sharing) 5, 6, 18, 76, 78, 91, 119, 147, 230 S savings schemes 44 46, 166, 168, 169, selection effects 191 social acceptance 14 social cohesion 13 15, 18, 34 social contract 30, 35, 36 solidarity transfers 33, 37, 233 subsidising solidarity 5, 18, 28, 37 41, 43, 45, 119, 120, 129, 130, 135, 230, 235, 236 T tailored pension solutions 183, 200, 235 transaction costs 83, 86 U uniform contribution and accrual system 25, , , 208, 209, 219, 232, 234, 236

10 Subject index 247 uniform contribution rate 7, 25, 95, 105, , , 137, 138, 142, 143, 145, 155, 192, 196, , , , 230, 232, 234, 236 utility 34, 77, 79, 82, 89, 106 V value transfers 2, 3, 5, 13 16, 18, 21, 27, 32, 37, 71, 95 97, 100, 101, 107, 116, 120, 229, 230, 233, 237 value-based ALM 95, 97, value-based generational accounting 95 97, 101, 102, 104, 116 veil of ignorance 35, 36, 43, 46 vertical solidarity 14 W warm solidarity 4, 6, 147 Z zero-sum game 95, 97, 103, 107, 116, 220