Population ageing in the Netherlands: Demographic and Financial arguments for a balanced approach
5 Conclusions and policy implications
The purpose of this paper has been to identify the impact of first-order effects of population ageing
on funding for retirement, leaving out other costs such as those of health care, which would
plausibly also be incurred without population ageing. The finding is that, although not minor, the
effects are not insurmountable. The dangers associated with an ageing population are being
exaggerated in a debate which focuses exclusively on their implications for the government budget,
as is done by the recent CPB study (Van Ewijk, 2006). As a result, other problems are also being
completely overlooked, resulting in a lack of balance in the public debate and policy making.
Demographic change was examined in two ways: on the basis of calendar years and of birth cohorts.
There are huge differences between the forecasts related to population ageing that these two
approaches produce. On a calendar basis, the old-age dependency ratio doubles to 44 percent at its
highest point, in 2040. On a cohort basis, the ratio has been high for quite some time and will rise
only slowly in the coming decades; the cohort that will retire at the age of 65 towards 2040 will be
at 29% as against 27% now. It is cohort development that best reflects individual life expectancy,
which has increased sharply at birth in the past 150 years but much less so at 65 years of age. It is
conspicuous - and the first sign of imbalance in the debate - that the fact that the Netherlands is
lagging behind other countries in terms of life expectancy, now and in the future, is not viewed with
disquiet. It may be because this lagging trend helps explain why the dependency ratio in the
Netherlands is expected to increase at a lesser rate than in most other countries.
An equally conspicuous point of imbalance is that the Dutch political debate on population ageing
pays paid no attention to the major socio-economic disparities in (healthy) life expectancy, which lie
at the heart of the British pension debate. As a consequence, some groups are making contributions
to the basic public pension AOW and occupational pension savings schemes for long years but
derive little benefit themselves given the high standard pension age - 65 years, if not 67 in the
future. A more equitable solution would be to allow people to retire after a certain number of
working years instead of at a standard age. It is of course imperative that we combat the underlying
health differences but as long as these exist, they need to be taken into account. It is also important
to recognise that women in particular will make up a significantly increasing share of the dependency
in the decades to come. However, the downward revision of the surviving dependant’s pension,
with women’s economic independence as its rationale, threatens to place them in an untenable
situation; even with complete pension accrual, their pension entitlement will be small because of the
high frequency of part-time work and insufficient to replace the absence of a partner’s pension based
on full-time income. Staving off this future poverty is deserving of greater attention and the low
degree of cohort ageing allows scope for this.
AIAS - UvA
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