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QBS 19 (A) Pension Models Netherland - au lieu de DC - Coggle Diagram

- - - - Caracteristic
        1) 90% coverage
        2) Negotiated through labor contracts
        3) Assets independent trust - union and ER representation
        4) ER can opt-out - must provide better benefits
        5) Objective is sustained 70% replacement ratio - indexing conditioned on performance
        6) Funding shortfall
        
        create plan eliminate within 3 years
        
        increase cont (ee, er, both)
        
        suspend / reduce indexation
        
        cut benefits (in extreme cases)
      - Weakness (exposed during financial crisis)
        1) EE risk profiles not aligned with investment policies (younger prefer more ALM risk, older less)
        2) Generational risk
        3) Lack of risk transparency
        4) Risk of significant benefit cuts (actives and retiree)
        5) Lack of transparency
        
        ees view benefit as guaranteed
        
        ALM risks not communicated
        
        not priced using economic valuation
      - Changes in Occupational Pillar
        
        1) initially FAP
        2) Changed to CAP
        
        Financial pressures on Occupational system
        
        1) Investment volatility
        2) Low interets rates
        3) Longevity
        
        Proposed changes:
        
        1) Collective DC
        
        Use same CAP formula (with index) (pooled assets/AL
        
        fixed ER cot
        
        EEs absorb risks:
        
        suspend or reduced index
        
        increase ee cot
        
        cut benefit(extreem caseS)
        
        Adavantages
        
        ER costs predictable
        
        greater EE control
        
        Desavantages
        
        EE bears entire risk
        
        2) defined Ambition plans (DA)
        
        Variable annuity
        
        fixed ER contributions (invest : benefit adjusted, longevity : commencement age adjusted)
        
        benefit adjustment phased-in
        
        Avantage
        
        ER costs predictable
        
        Invest GL affects everyone proportionaly
        
        Transaparency (plan prov, risks)
        
        smoothed adjustments - allows retirees to adjust
        
        Desavantages
        
        EE bears entire risk
    - - Advantages
        1) Adjustments spread to everyone
        
        ER
        
        Active members
        
        inactive members
      - Désavantages
        1) Worker/retiree friction
        
        benefit adjustments
        
        investment policy