1. Supplementarytable on pensions in The Netherlands Methodsandproblems

2. The Supplementary table on pensions in The Netherlands • ESA 2010 introduced the new Supplementary table on pensions T29 • So far we only produced T29 for the year 2012, published in a discussion paper (August 2015) • This presentation will focus on the methods and problems of producing T29

3. Summary of T29 Pension Entitlements end 2012

4. What is the coverage of T29? • ESA 17.13: old age + survivor + disability. • ESA 17.122: defines pension in T29 as old age pensions. Disability and survivor pensions are included if these cannot be separated from the old age pensions. • TCG 3.1 box 3: defines pensions to include old-age-, early retirement-, survivor- and disability pensions • How to deal with this discrepancy? • NL: just old age and early retirement pensions, excluding other pensions if possible.

5. types of pension institutions • 1st pillar state pensions • Pension funds • Life insurance companies • Pay-as-you-go (PAYG) and direct payment pension arrangements

6. 1st pillar unfunded pension model Input: • Current population • Life expectancy of the currentpopulation • Age profile of unfunded pension benefits • Assumptions • Nominal discount rate (interest rate term structure) • Inflation (2%) • Indexation (1%) • Accrual of benefits 2% per year of the average benefit

7. Discount rate Impact on results: Using the Eurostat discount ratelowers the entitlementsbyone-third!

8. types of pension institutions • 1st pillar state pensions • Pension funds • Life insurance companies • Pay-as-you-go (PAYG) and direct payment pension arrangements

9. Second pillar pensions (columns A/G) Entitlements by type of fund end 2012

10. How to split into DB/DC 1 • Little info: DC-factor based on premiums • DC-factor is used for industry wide pension funds, professional pension funds and pension insurance contracts • Company pension funds; one-to-one relation with the employer • DB turned into DC or more often into CDC and sometimes buying off accountability for shortages • Such CDC-arrangements are no longer classified as DB • But as DC for the employer bears the risks • Building entitlementsandpaying benefits are twounseparablephases of one pension scheme

11. How to split into DB/DC 2 Entitlements

12. Estimating entitlements for PAYG and direct payment pension arrangements • Early retirement pensions for private and public workers and direct payments for some special groups of government workers like military men • Estimation of early retirement entitlements: future benefits discounted with same factor as pension funds • Some very small pension arrangements: capitalization of benefits in year with factor 10 • TCG reveals an inconsistency in this category: • Unfunded private early retirement pensions should be reported as funded in column B • Whereas the unfunded government workers early retirement pensions should be reported as non-core in column G

13. Domestic/foreign (columns J and K) • The split is made using a factor based on premiums or assumed 0 • Pension funds don’t know the domicile of pension receivers • Factor underestimates Dutch participants living abroad but using domestic bank accounts • No data on pensions of Dutch employees in foreign pension schemes

14. Conclusions • A realistic and practical methodology • Using actuarial reports as much as possible • Using factors on DC/DB, capitalization and foreign/ domestic because of poor information • At some points our method can be tuned in more detail • Besides these points some overall questions need to be solved:

15. Questions to solve • Coverage is not clear: including survivor and disability benefits or not. And what about other social insurance arrangements like unemployment, sickness? • Internal versus international consistency of T29 when selecting a discount factor • Private and public unfunded early retirement pensions are not treated similar