The corrosion of occupational pensions solidarity in the Netherlands

Abstract

By embedding pre-funded occupational pensions into the status order of a neo-corporatist system of industrial relations, the Netherlands has developed a second pillar that is second to none in terms of size, inclusiveness and solidarity. But this has also led to a universal financialisation of retirement provision, making the income of the elderly population contingent on the vagaries of financial markets. Two financial crises within less than a decade ended the illusion that such generosity can come at a low price, and thus be reconciled with competitive labour costs. The Dutch government initiated a series of reforms that gave employers a partial exit from shouldering the risks of retirement, reduced generosity and recently also started to undermine the extent of solidaristic redistribution. Hence, occupational pensions are gradually being disembedded from the status order crucial for their comparative good performance in the past with regard to reconciling social and financial sustainability.