Partner Perspective: Utrecht School of Economics 6

Newsletter of the Network for Studies on Pensions, Aging and Retirement Issue 1 Spring 2005

Partner Perspective: Utrecht School of Economics 6 Meeting Europe’s Social and Economic Needs 15 Netspar Netspar News Visiting address is published by Netspar, Network for Studies on Pensions, Faculty of Economics and Business Aging and Retirement Administration Tilburg University, Warandelaan 2, 5038 AB Tilburg Postal address P.O. Box 90153, 5000 LE Tilburg, The Netherlands Phone +31 13 466 2109 Fax +31 13 466 3066 E-mail [email protected] www.netspar.nl

Board of Scientific Directors Lans Bovenberg Arie Kapteyn Theo Nijman (chair)

Coordinators Administration: Jet de Ranitz History of Netspar 3 Education: Arthur van Soest Partners: Rob Bakker

Scientific Council Academic Excellence Richard Blundell, University College London Safeguarding Quality 4 Axel Börsch Supan, University of Mannheim Paul Embrechts, ETH Zurich Olivia Mitchell, Wharton - University of Governance Pennsylvania Luis Viceira, Harvard University Netspar Style 5 David Wise, Harvard University

Advisory Board Jacques Hagenaars, Tilburg University Partner Perspective Ruud Hagendijk, Mn Services Karel Noordzij, PGGM Utrecht School of Economics 6 Jan Nijssen, ING Hans van Oijen, Stichting Instituut Gak Erry Stoové, SVB (chair) Theo Verhallen, Tilburg University Educational Ambitions 7 Guus Wouters, Interpolis

Netspar partners Pension funds and asset liability Research companies ABP Macro, Meso and Micro Teams 8 Mn Services PGGM SFB Groep Insurance companies and banks Network ABN AMRO Achmea Four Men, Three Pillars and Netspar 12 Fortis ASR ING Interpolis Public sector EU Conference 15 DNB Ministry of Economic Affairs Ministry of Finance Ministry of Social Affairs and Employment Short News – Calendar – The Cartoon 16 Sociale Verzekeringsbank Other organizations Stichting Instituut Gak

Support Staff Marleen Brouwer Lenie Laurijssen Ludwina van der Wijst

Editors Rob Bakker Clemens van Diek Etc. Editorial Services, Breda

Photography Beeldbank, Tilburg University Ben Bergmans, Tilburg University Verbeeld, Tilburg Clemens van Diek, Tilburg University Marcel van den Bergh/ Hollandse Hoogte Raymond Rutting/ANP Photo Bart Nys fotografie, Overasselt

Cartoon Hans van den Tillaart

Graphic Design LaVerbe, Nijmegen

Printed by Rikken Print, Gendt

ISSN 1574-8790

By Lans Bovenberg Scientific Director Netspar

Consider this first issue of Netspar News as a rather elaborate birth announcement. Netspar was conceived when the Dutch National Science Foundation (NWO) announced in August 2003 that I was awarded one of the 2003 Spinoza prizes. How to spend the seed money of 1.5 million euro that came with the Spinoza prize? Theo Nijman and I brainstormed one afternoon about the possibility of working together on a research institute on pensions. We tested the idea with Dick de Beus, who at the end of 2003 still served as the executive director Lans Bovenberg of PGGM – the pension fund for the Dutch (founding father of Netspar, l) and Hein health care sector. Dick welcomed the idea – van Oorschot to put it mildly. Soon after that, Arie (president of Tilburg Kapteyn and I spoke with Stichting Instituut University, r): Netspar, a piece of cake? Gak. This private foundation, which supports research in social insurance, doubled the Spinoza premium. With the support of NWO, PGGM, and the GAK fund, only if her analyses are supported by The dynamics in the logo suggest the the conception had taken place. During the scientific evidence, which can be constant flow of new ideas that give rise to three months before the official award of reproduced and tested by her international innovation when combined. At the same the Spinoza premium on February 4, 2004, scholarly family. time, social innovation should respect the seedling gained considerable weight: enduring values of intra- and all the other participants lined up. Her final main character trait is sociability intergenerational solidarity and reliability. and, related to that, a willingness to listen Taking on this challenge, Netspar wants to Core values to the arguments of others. Netspar likes to explore how the future and the past can be Netspar, born on March 30, 2005, is a bring people together so that they can learn linked: protecting what is valuable and healthy, prosperous girl with three key from each other’s knowledge, experiences replacing what no longer fits new character traits. First of all, she is and perspectives. She is also quite open- circumstances. independent. Although she adores her minded, in that she is not committed to parents, she is not afraid to question their one particular worldview. She loves The two areas in the logo that are linked arguments. As a female, she has a economics, but she also has a keen interest by Netspar also reflect the subject area of somewhat different perspective on the life in sociology and psychology. Netspar: the intergenerational contract and cycle than her brothers within her male- the dynamics of the life cycle. The dominated pension family. Rather than The symbolism of Netspar’s logo intergenerational contract stipulates that taking strong positions herself, she always The logo of Netspar suggests exchanges, each generation invests in the human likes to bring balance into the debate by links, balance and focus. Most importantly, capital of the next and is taken care of at putting forward the key trade-offs: it symbolizes the exchange between various the end of its life by the generations in sketching the playing field, and leaving it to spheres: education and research, academia which it has invested. The point at which others to take policy positions on that field. and practice, public and private sectors, the two areas meet represents the rush hour micro and macro, the old and the young. of life in which the middle generation cares Her independence is closely related to her Netspar links these various spheres in a for both the previous and the next intellectual interests. This should come as flexible, dynamic network organization. generation. The past and the future, the old no surprise, since she was conceived by the Netspar also aims to balance the various and the young, are thus tied together. NWO. The Spinoza prize guarantees scientific arguments and to focus different disciplines integrity and scholarship. Netspar realizes and perspectives on a single area: pensions, that she can maintain her independence social insurance and aging. Netspar works in the present, where the action is, to employ knowledge accumulated in the past to address future challenges. Academic excellence Safeguarding Quality

By Theo Nijman Scientific Director Netspar

Adept management of its academic excellence is one of the essential conditions for Netspar’s success. International networks can be built and maintained only if a player is highly respected in the academic community. Likewise, knowledge that is developed in recent work internationally can be exploited to address policy questions that are relevant in the Dutch institutional setting only if stringent This page: Theo Nijman academic standards are met. To ensure that Opposite: Erry Stoové all of its activities will meet such high standards, Netspar has implemented a number of mechanisms for good ...through activities and publications Aspirations and advisors governance. Openness and transparency will be Netspar will initiate a new Master of Science hallmarks ensuring the quality of all of program on ‘Economics and Finance of Netspar’s activities and publications. For Aging’. Accreditation of this program (slated Starting at the top of the organization example, Netspar researchers must make to begin September 2006) also requires a The first indicator of quality management at their assumptions (as well as underlying substantive quality check by the accrediting Netspar is the joint role played by the three datasets and models) accessible, in so far as authority, the NVAO (the Netherlands- Scientific Directors and seven Program possible, to all participants. Discussion Flemish Accreditation Organization). Coordinators – all with excellent academic Papers in the Netspar DP series will always Netspar’s Partner Council, comprised of credentials, and the latter representing six present not only the views of the author, representatives from all sponsoring parties, different Dutch universities – in the but also comments submitted by a will help to ensure that Netspar’s research selection of senior researchers. In the discussant and a summary of the pertinent and its education program remain in line selection process, the Netspar management discussion (which takes place after every with the needs of the sponsors. The evaluates carefully an individual’s presentation of draft DPs). Likewise, Netspar Advisory Board has a clear non –executive publications in the highest ranked academic will organize brainstorm meetings that role in outlining and safeguarding strategic journals worldwide – another quality bring together people with opposing views decisions. Last, but not least, Netspar’s control instrument. to address topical policy questions. Scientific Council is vital in safeguarding A summary of these sessions, and academic quality and advising Netspar’s Junior researchers are recruited primarily on discussions, will be published in sub- researchers on emerging developments. the international job market, which was sequent issues of Netspar News. Netspar will Each member of the Scientific Council has held this year in Philadelphia in the first also publish a series of Reference Papers an outstanding academic reputation and week of January. Tough international outlining the implications of specific broad experience in addressing policy competition, transparent selection developments in the literature for selected questions. procedures and the involvement of many policy questions. In line with its quality senior Netspar researchers assure quality. standards, Netspar will not take sides with The PhD students that are to be recruited regard to specific policy views, but rather this spring will have to satisfy the quality will describe and analyze the relevant standards of both Netspar and their local arguments. Graduate School. Graduate Schools in the Netherlands are evaluated on a regular basis through international peer reviews. What will this mean for the economy in Governance terms of growth, the demand for human services and permanent education? New demands will be placed on the organizations co-operating in Netspar, such as banks, insurance companies, pension funds and government institutions. Speaking as one ‘Netspar Style’ of the partners, I am looking forward to receiving the results of the Netspar research projects, and to gaining new insight along the way. The Partner Council and the Advisory Board together represent a modern supervisory arrangement, based not on formal powers but on authoritative deliberations and close After some exploratory talks, a formula co-operation regarding research proposals. was created that was acceptable to all. Partners were put into more or less coherent Knowledge exchange: The Outer Ring clusters of participants from similar sectors, Partner organizations may benefit from creating a natural system of representation. Netspar’s research program also through Each cluster sends a delegate to Netspar’s Netspar’s Outer Ring. Although the Outer Advisory Board, and each cluster makes Ring has no governance role, it is vital in its own administrative arrangements. the exchange of knowledge, one of the key This construction allows a perfect balance tenets of Netspar and its partners. between maximum commitment and The Outer Ring gives selected researchers transparent consultation procedures, with and employees from partner organizations the Advisory Board informally acting as a the opportunity to take part in Netspar Supervisory Board. While respecting the seminars. formal responsibilities of the University Board and its administrative and Off to a good start supervisory bodies, the Advisory Board The first meeting of the Advisory Board protects the quality and integrity of the got off to a promising start. In a pleasant research program. and constructive exchange of views, we contemplated the program and ambitions The next level: Partner Council of Netspar initiator Lans Bovenberg and the Although the horizontal accountability of Netspar management. A firm foundation the Advisory Board could have sufficed, has been laid for good governance. allowing Netspar to easily meet the criteria By Erry Stoové (SVB) of a network organization, Netspar asked its 2005 Chairman of Netspar’s Advisory Board co-founders and sponsors for a second level Netspar’s Participants of commitment: the Partner Council. The An unusual organization calls for unusual Partner Council offers partners a platform Advisory Board governance. Netspar is a unique network for direct exchange of knowledge and protects the quality and integrity of the providing a stimulating atmosphere for critical thought. Within this council, research program. Each ‘cluster’ of partners academia, the public sector and the private partners share responsibilities and receive sends one representative to the Board. sector to explore the many facets of opportunities for actively planning the pensions, aging and retirement. Participants activities. Each partner organization sends Partner Council in the Netspar program have been creative a representative-generally, someone offers partners a platform for planning in shaping a modern and transparent responsible for policy development and activities and for direct exchange of administration worthy of the organization research within the organization. The knowledge and critical thought. Each and its aims. From the early stages in Partner Council is thus a sort of ‘experts participating organization assigns one Netspar’s formation, Netspar’s co-founders exchange’. expert as its representative. and sponsors were meant to take an active role in formulating, planning and partaking Together with the Advisory Board, therefore, Outer Ring in the research program. With regard to the Partner Council offers a form of promotes vital exchange of knowledge. governance of Netspar, participating horizontal accountability. Of course, Netspar Partner organizations select its own companies and institutions were asked to is vertically accountable to the University representatives for seminars. make a commitment on two different levels. and Faculty management. The Partner Council gives its members a hands-on opportunity to partake of a sophisticated First level of governance: Advisory Board exchange of knowledge. This requires active Netspar partners have committed to participation. None of our organizations can participation in an advisory board. In view afford to neglect the permanent exploration of the diversity of parties involved, this took of social and economic developments. a great deal of effort. It was soon evident, Our colleagues can benefit from a for example, that an advisory board continuous orientation towards science and incorporating all the participating parties society – especially in this field. Society is would be unworkable. set to go through an enormous change over the next decade. The number of pensioners will double. The elderly of the future will be fit, and eager to continue contributing to society. Partner perspective Utrecht School of Economics

The Utrecht School of Economics (USE) welcomes Netspar as an important initiative. Netspar will contribute to the understanding and scientific solution of the problems of an aging society, which put such great pressure on the valuable institutions of the welfare state. Peter de Gijsel (r), Furthermore, Netspar can be seen as a converses with Netspar serious attempt to stimulate cooperation scientific director Arie Kapteyn (m), and between otherwise competing universities Theo Verhallen, Dean of that have at their command the expertise the Faculty of Economics that is needed to master the challenges that and Business Administration of Netspar wants to meet. Because of its Tilburg University network character, Netspar offers small partners like the Utrecht School of Economics the opportunity to participate in By Peter de Gijsel The crisis of the modern welfare state began and benefit from the network economies Dean, Utrecht School of Economics in the 1970s. The lessons that have been that will be produced by the cooperation drawn since then, from attempts to with top universities on a common research Netspar, an international network of maintain the welfare state, have clearly theme. This will promote USE research and academia and private and public demonstrated that welfare state institutions help to stimulate the youngest economics institutions, is designed to meet one of the were developed as specific solutions to faculty in the Netherlands. Because USE greatest social political challenges of this social risks. Social risks themselves change focuses its research and education on the century: the restructuring of the welfare constantly because of the continuously institutional, historical and spatial state. The welfare state was developed in varying social, political and economic dimensions of economic problems and western countries during the last century as structure of modern societies. It is thus encourages multidisciplinary economic a response to the growing demand of their important to understand how and why research in cooperation with other citizens for protection against social risks as institutions evolve over time, and how they disciplines such as law, history, sociology a way to provide a socially optimal standard can be altered to deal with the changing and geography, USE will certainly have its of living to the part of the population that character of social risks. The dynamic own valuable part to play in the is not economically active for socially character of the welfare state makes Netspar network. accepted reasons. institutional change and the consequences for an efficient and equitable distribution of social risk the core problem of a scientific analysis of the welfare state.

Restructuring the welfare state The social, political and economic consequences of restructuring the welfare state give an ambitious edge to Netspar. Its mission calls for a multidisciplinary approach, and its success depends greatly on cooperation between academics from various disciplines, such as economics, law, political sciences, psychology and sociology, and practitioners in the fields of social security and social protection. Educational Ambitions

By Arthur van Soest Employees of Netspar participants Courses and more information Director of Education, Netspar Interested employees of the Netspar Three courses will be given during the partners may take part in one or more period September – December 2005: Courses starting this September will courses. These courses encourage interaction Introduction to Economics and Finance of maximize interaction between employees between regular students, employees of Aging, Microeconomics of Insurance and of Netspar partners, master’s students and Netspar partners, and researchers. For Redistribution, and Investment Analysis of researchers in Netspar’s new master’s example, master’s students and employees Aging and Pensions. Between February and program, ‘Economics and Finance of Aging’ of Netspar partners can work on joint May 2006, some courses will be given on assignments, with the master’s students specific topics in financial, macro- and At the forefront of Netspar’s education benefiting from the employees’ practical microeconomics of aging and pensions. ambitions is a new master’s degree program experience, and employees benefiting from More information will be provided in the that Netspar plans to introduce at Tilburg the students’ knowledge of relevant recent next issue of Netspar News. University. The Economics and Finance of developments in economics and finance. Aging, which focuses on aging-related See also www.tilburguniversity.nl/masters issues such as pension systems, retirement, Exchange of knowledge redistribution and optimal taxation, optimal These courses are only one way in which investment strategies, etc., aims at students Netspar aims to stimulate exchange of who want to work at insurance companies, knowledge in economics of pensions and pension funds, other financial institutions, aging between practitioners and academics. or the public sector. Although the program Other activities organized by Netspar with is officially slated to start in September the same goal are the pension days, 2006, some courses will already be given as pension workshops and brainstorm of September 2005. Courses will be taught sessions. by researchers affiliated with Netspar from Tilburg University and other Dutch universities. Pensions, aging and retirement raise Research numerous questions at the macroeconomic level, as well as with respect to the behavior of institutions and individuals. Netspar will addressresearch questions at all three Presenting levels, by the macro, meso and micro research teams, respectively. Each team will be led by one of the scientific directors: Lans Bovenberg (macro), Theo Nijman (meso) and Arie Kapteyn (micro). They will be assisted by seven program Macro, coordinators.

Macro At the macroeconomic level, high and volatile pension premiums may produce Meso and adverse macroeconomic effects. Moreover, pension policies give rise to substantial intergenerational redistribution, while differences in retirement institutions within Europe may yield substantial international Micro spillovers across countries. Meso At the institutional level, the trade-off between risk and return for pension institutions and their participating members as well as the supervision and Teams regulation of pension funds and insurers are key issues.

Micro To address macroeconomic and institutional issues, one should assess how incentives created by pensions and social insurance affect labor market behavior (including retirement choices), portfolio choice, and consumption and saving behavior.

Integrating three research fields..... One of the explicit aims of Netspar is to facilitate exchanges between researchers working in various sub-programs in order to develop a broad vision on aging. Indeed, as aging proceeds, pension funds are increasingly impacting key issues faced by public policy.

One example is the effective retirement age affecting the incentives to maintain human capital and the political support for intergenerational solidarity. Other examples are the collective burden (which includes pension premiums) impacting the long-term performance of the economy and its macroeconomic stability, and the portfolio decisions of pension funds affecting the overall supply of risk-taking capital.

Research on these macroeconomic issues thus requires insight into the policies of pension funds. In assessing the sustainability of pension schemes, the sensitivity of individual consumption and labor-market behavior to financial incentives is crucial. Hence, the objectives and the behavior at the individual level are relevant in a life-cycle context. The Macro Team

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This behavior can be analyzed from researchers will carry out part of Netspar’s Roel Beetsma (1) development and different angles (economics, psychology, research program, present a certain number Universiteit van Amsterdam institutional investors; International capital flows, Public pension guarantees and sociology), which should be integrated. of academic and reference papers, act as net foreign assets and real and moral hazard discussants in Netspar meetings, act as exchange rates ...with pension finance as applied micro referees of Netspar working papers, are Kees Koedijk (8) Jan Boone (2) Erasmus Universiteit and macro available for expertise service, and/or teach Tilburg University Rotterdam To explore the added value of obligatory, in the education program. The output and Optimal tax policy, Risk and return of occupational pension schemes in terms of activities of the senior researchers will be retirement decisions, and sustainable investing redistribution enhanced solidarity and reduced market evaluated annually. Clemens Kool (9) frictions, both macroeconomic and Lans Bovenberg (3) Utrecht University microeconomic aspects are relevant. In addition, young top-notch researchers Tilburg University International capital flows, Optimal tax policy, net foreign assets and real The quality of pension institutions should will be recruited on the international job retirement decisions, and exchange rates ultimately be judged on the basis of the market. These researchers, who have just redistribution; Risk in added value for their individual received their Ph.D. degree at top U.S. and general equilibrium Lex Meijdam (10) models and pension Tilburg University stakeholders. Moreover, the sustainability European institutions, will be appointed on policy; Optimal life-time Aging, pensions and of pension policies depends on both tenure-track positions at one of the income taxation fertility; International microeconomic responses on labor and participating universities. Netspar buys spillover effects of aging Peter Broer (4) and pension systems capital markets and on the macroeconomic research time of this tenure-track faculty. Tilburg University implications of this behavior and of aging The university also guarantees a tenured Risk in general equilibrium Enrico Perotti (11) for the prices on these markets and the position after five years if the tenure track models and pension policy Universiteit van Amsterdam Political economy of government budget. faculty meets certain criteria. Sylvester Eijffinger (5) pension reform Tilburg University Core researchers: Inside ring This promise allows Netspar to attract Financial supervision in Coen Teulings (12) Europe; Stability and Universiteit van Amsterdam All three research teams consist of top-quality researchers. Junior researchers growth pact: demographic Social insurance, pension 10 to 15 researchers affiliated with Dutch from MIT, Harvard, the London School of developments and funds and life-cycle saving universities. These researchers have been Economics, the European University Institute pensions Harrie Verbon (13) selected by the scientific directors and and University Carlos III in Madrid, among Ben Heijdra (6) Tilburg University program coordinators on the basis of their others, have already decided to join Netspar Universiteit van Groningen International spillover research proposals as well as their as of September 1, 2005. Finally, the costs of Non-traded goods, aging, effects of aging and and pensions in open pension systems performance in terms of publications in 12 Ph.D. students will be (partially) funded economies top-quality academic journals. on the basis of competitive research Sweder van Wijnbergen (14) Part of the research time of these senior proposals provided by the universities. Harry Huizinga (7) Universiteit van Amsterdam Tilburg University Pension reform around the researchers is funded by Netspar. The Financial market world The Meso Team

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Joost Driessen (1) Bertrand Melenberg (9) Universiteit van Amsterdam Tilburg University Pension investments in Portfolio choice and corporate bonds equilibrium pricing under loss aversion Feike Drost (2) Tilburg University Theo Nijman (10) Portfolio insurance and Tilburg University crash risk Advantages and disadvantages of Piet Eichholtz (3) participation in collective Universiteit Maastricht pension schemes Effects of the aging population on real estate Frans de Roon (11) markets Tilburg University Portfolio choice and asset Mark Goovaerts (4) pricing including Universiteit van Amsterdam economic risk factors Determination of financial insurance streams based on Peter Schotman (12) comonotonic risks Universiteit Maastricht Long-term investing with Jenke ter Horst (5) persistent risk factors Tilburg University Performance evaluation Hans Schumacher (13) of hedge funds Tilburg University Valuation at market value Frank de Jong (6) Universiteit van Amsterdam Marno Verbeek (14) Valuation of inter- Erasmus Universiteit generational pension deals Rotterdam Performance persistence Rob Kaas (7) and money flows Universiteit van Amsterdam Determination of financial Anja de Waegenaere (15) insurance streams based Tilburg University on comonotonic risks Measurement and management of longevity André Lucas (8) risk Vrije Universiteit Amsterdam Preference specification for Bas Werker (16) pension funds Tilburg University Hedging inflation risk The Micro Team

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Rob Alessie (1) Jan Nelissen (8) External fellows: The Outer Ring Utrecht University Tilburg University External fellows from Dutch and foreign How social security and Micro-simulation of pension wealth affect transitions in and out of institutes and universities are also household savings and the labor force appointed. These fellows participate in the portfolio choice activities of Netspar (e.g. workshops, annual Jan Potters (9) Eline van der Heijden (2) Tilburg University conference) and help to build links between Tilburg University Measuring the degree of academic institutions and participating The relationship between solidarity in pension institutions. risk attitudes and time systems and social preferences insurance; The relationship between Many employees of Netspar’s partners will Matthijs Kalmijn (3) risk attitudes and time also participate actively in the Outer Ring. Tilburg University preferences Aging in a life course They will be available as discussants and perspective Fred van Raaij (10) referees and will carry out part of Netspar’s Tilburg University research program. More information on this Arie Kapteyn (4) Consumer financial Tilburg University/RAND planning and (il)literacy group of participants will be provided in a Understanding economic subsequent issue of Netspar News. decisions in old age Arthur van Soest (11) Tilburg University/RAND Peter Kooreman (5) Comparing work For more details: www.netspar.nl Universiteit van Groningen disabilities across Default and labeling countries; Expectations effects in savings and and realizations of consumption decisions; a retirement benefits; field experiment Savings, portfolio choice, and retirement Maarten Lindeboom (6) Vrije Universiteit Klaas de Vos (12) Amsterdam Tilburg University Health, work, and Pension systems and well-being before and retirement after retirement

Ruud Muffels (7) Tilburg University Research description in progress

Network

‘It is important to have an umbrella organization to do research on pension issues on a scientific basis’ Four Men, Three Pillars and Netspar

Left: Eduard Ponds (ABP) Right: Rob Bakker (Netspar)

By Ton Kamminga Worth the effort? Why, we asked them in the first place, is It’s remarkable, though not at all Netspar such a good initiative and worth coincidental, that the partners of Netspar sponsoring? ‘It’s important,’according to can be found in all three pillars of the Dutch Reinoud van den Broek, ‘to have an pension system – from three ministries umbrella organization to do research on representing the first pillar of government pension issues on a scientific basis. Another pensions together with SVB, the important aspect is to explore the edges of independent administrative body the pension field – particularly in view of responsible for the administration of Dutch the discussions that will take place in the state pensions, to a cadre of pension funds, near future. Take, for instance, the aging of insurance companies, banks and pension the population and the solutions that can administrators taking care of the be found to solve the many problems that supplementary, collective pensions in the go along with it.’ Above all, Van den Broek second pillar, to the individual pension senses that there is a lack of vision schemes in the third pillar. Two nowadays on how aging facilities should representatives of these partners, Reinoud be shaped. ‘Netspar can, at the very least, van den Broek (Achmea, insurance contribute to establishing such a vision company) and Eduard Ponds (ABP, pension through independent, scientific work. fund), exchanged ideas with Frank de Jong This explains the great enthusiasm for (professor, Universiteit van Amsterdam and sponsoring this initiative.’ senior researcher Netspar) and Rob Bakker (Netspar), on the eve of Netspar’s debut. More or less the same arguments motivate Eduard Ponds, whose pension fund has always been interested in scientific work. ‘That’s also why ABP itself accommodates quite a number of dual positions. That is, many ABP employees also have a position at a university for one or two days a week.’ Amongst them are a number of PhD students, but Ponds also mentions five professors. ‘The investment strategies of ABP have a the ‘outer ring’ of highly skilled people that though. Within Netspar, however, the scientific basis. The decision to participate are employed in the field, who can researcher will be free to state his or her in Netspar was therefore quickly made.’ contribute importantly to the knowledge own views.’ Ponds agrees that this is Concerning the research program, Ponds exchange between the Netspar participants. beneficial: ‘the independence of the hopes to get suggestions on ‘how to put all scientific work is one of Netspar’s kinds of individual pension scheme Demarcation attractions – not only for those who are elements on top of a universal basic A timely and controversial issue is the working there, but also for those who can arrangement, in order to meet the needs of demarcation of the activities that are benefit from the results.’ Needless to say, a very heterogeneous group of clients.’ exclusively reserved for the pension funds De Jong fully concurs with the latter (second pillar), and those that are left to statement. ‘Scientists do have an The universities contribute to Netspar in the free market (third pillar). It is well independent position, which enables them kind. ‘Research time is made available known that insurance companies in the to keep a greater distance from the daily by the university where the researcher is Netherlands are not very happy with the problems that are confronting the people affiliated,’ adds Frank de Jong. Of course, compulsory membership to pension in the field. Many intriguing questions are his commitment to Netspar is mainly schemes, as they exist in many branches. ahead of us... What will happen, for scientific. ‘What most appeals to me is the Van den Broek notes that Achmea is active example, when more defined-contribution international dimension of the program.’ in both the second and third pillars, just elements are introduced into pension A number of other researchers from his like the other insurance companies that contracts?’ Van den Broek points out the university are participating: ‘the researchers are participating in Netspar. ‘Various essential role of scientific research into working in the field of pensions, retirement developments – among them pension fund the consequences of various future and aging were easily traced, and many of governance and outsourcing of executing developments for, among other things, them enthusiastically supported the tasks – bring about a situation in which our pension system. ‘We will have to work initiative.’ more and more typical pension fund longer, we will certainly live longer, and in activities can be carried out by divisions the meantime we must decide how to The word enthusiasm appeals to Rob of insurance companies.’ organize life-course arrangements.’ Bakker. His contribution is to promote a Bakker asserts that Netspar can play a role better understanding between the in the discussion on compulsory International profile academic world and the partners of arrangements, in view of the European ‘Compared with, for instance, CPB (the Netspar. ‘Such cooperation should become regulations that follow from the recent Dutch bureau for economic policy analysis fruitful for the researchers as well as the pension fund directive. ‘Netspar will that also does research on pensions and partners.’ In this context, he refers also to never take an outspoken policy position, aging), Netspar strives to build up an behave when they are confronted with these choices.’ Both Van den Broek and Ponds confirm that they are very interested in research on such issues.

Expectations ‘By joining Netspar, partners do get specific privileges,’ says Bakker. ‘One of these is the opportunity given to qualified specialists from the ‘outer ring’— under certain conditions— to do research themselves within Netspar and to participate in the various activities of Netspar (such as the Pension days, Pension Workshops and brainstorm groups).’ The partners will of course also have direct access to the students that graduate from Netspar’s new master program, ‘Economics and Finance of Left: Frank de Jong (UvA) Aging,’ which in turn may function as a Right: Reinoud van den training opportunity for selected employees. Broek (Achmea)

The expectations for Netspar? Running high, all four men confirm. Van den Broek international profile, while CPB mainly appreciates especially the helicopter view concentrates on national issues,’ states that Netspar can provide. Ponds’ parting Bakker. CPB and Netspar, in fact, have shot: ‘we have a fine and solid pension already explored ways to work together. system, but we’ve got to be aware of the ‘By doing so, Netspar will not replicate the dangers and new external developments excellent work of CPB, but rather will focus that are challenging that system. To prevent more on academic and international issues. severe and irrecoverable failures, we must Although the research within Netspar does continuously adapt the system. Netspar can not necessarily have to lead to practical analyse the policy options that are solutions, it does have to meet a certain available.’ scientific standard.

Through the international network and the education program that will be initiated, new ideas can be incorporated in the Dutch policy discussions.’ The international dimension of the Netspar research appeals strongly to De Jong. ‘Scientists tend to have a lot of international contacts. We all know that pension and aging issues are even more urgent in some other countries, and though their pension systems are mostly quite different from ours, we can learn from their efforts to indicate and solve their problems – just as scientists can also learn from practice,’ De Jong adds, recalling an earlier remark made by Ponds about the need for more individual elements, thus giving members a choice in creating their personal pension arrangement. ‘Then, researchers can explore how people actually Impressions of the EU Conference Meeting Europe’s Social and Economic Needs

By Rob Bakker enhancing the labor participation of the Director Partner Contacts, Netspar elderly and raising labor productivity. He further advocated the role of Opportunity supranational centers of excellence wherein On 17 and 18 January 2005, a conference was governmental bodies, market parties and Lambert van held at Tilburg University entitled ‘Meeting research institutions work together on Nistelrooij Europe’s Social and Economic Needs’. One socially innovative solutions to bridge that of the workshops, ‘Aging Society’, offered gap. Such centers should also motivate Netspar a timely opportunity to present researchers to come and stay in Europe. itself and to start the crucial process of building a strong international network of Jan Nijssen, Global Head Pensions and CEO researchers working in the area of Pensions Central Europe-Insurance, supported the and Aging. Representatives were present view of van Nistelrooij from the perspective from the European Parliament, the European of a globally acting insurance company. Commission, American and European His remarks at the seminar focused, among universities, and banks, pension funds and other things, on the need for an effective insurance companies. framework establishing a life-time savings account that effectively could be One of the main themes of this workshop institutionalized in a revised Dutch three- was aging and retirement in Europe. The pillar pension system. Richard Suzman Richard Suzman keynote speaker, member of EU parliament (National Institute of Aging, USA) Lambert van Nistelrooij, commented on the maintained that the consequences of existing gap between what we know and population aging – a crucial global what we actually put into practice with phenomenon – must be addressed within respect to active aging and empowerment an excellent research infrastructure. Suzman in the EU, which is experiencing a gradually was critical about the poorly developed shrinking labor population. He emphasized datasystems in the EU, a precondition for the enormous challenge of simultaneously aging-related economic research.

Declaration

During the conference, participants decided Europe must take the lead facilitates country-by-country comparisons, to commonly address the European Council Europe can take the lead in this social but also stimulates the interdisciplinary and European Parliament with regard to the innovation aimed at successful aging, since research (social sciences, psychology, pressing need to focus on and devote Europe is the most aged continent of the medicine) needed to address the challenges greater research to the consequences of world. Europe must take the lead if it is to raised by aging.(....) population aging for the EU economy. remain one of the most competitive and innovative economies in the world (.....). Concrete proposal Some excerpts from the Aging Declaration As the most aged continent on the globe of Tilburg, January 18, 2005: Mutual learning and data infrastructure with a rich institutional and cultural Reform of pensions, health care and labour diversity, Europe must take the lead in The Lisbon agenda sets out an ambitious markets is a major policy issue in all aging research. Hence, aging and program to improve Europe’s lagging European countries. The rich diversity of its retirement should get a significant as well growth performance. Population aging national institutions allows for mutual as a sufficiently equipped priority in further weakens Europe’s growth potential learning. Europe can become a laboratory Framework Programme 7. Moreover, part unless Europe succeeds in activating its for social innovation. (....) Europe therefore of the budget for large data infrastructures aging population. Yet, aging also yields needs to develop a data infrastructure that should be devoted to developing opportunities. People can enjoy life longer. documents how human capital is comparable data in Europe’s nations to In addition, lower birth rates and improved developing over the life cycle in the various address the challenges of aging. This is in education enable women to aspire to a regions and how different national line with the political commitments of the career in paid employment. At the same institutions affect our human resources. As G-8 at Denver in 1997. time, aging calls for social innovation people live longer, do they remain healthy (.....). longer? How do norms, values, social networks and family ties change as people age? This data infrastructure not only Short News

Calendar Netspar 2005 European Pension Debate 2005 Netspar provides a coherent program of in- Friday, April 1, the Competence Centre for depth discussion possibilities and education Pension Research at the Law Faculty of for its partners, allowing the participation Tilburg University will organize a European of interested academics and experts from Pension Debate, entitled: Pan-European participating institutions in the private and pension solutions: Useful and necessary? public sectors. Netspar thus contributes to Lectures will be given on the following qualification training and executive subjects: The pension-fund directive, development. Seminars taking place during Pensions in East-European member states, Netspar pension days and pension Fiscal solutions to overcome impediments in workshops (open to all partners of Netspar) cross-border employment and Creating a will bring practitioners up-to-date with common structure for pan-European recent developments in the literature. pensions. In addition, renowned university lecturers, The conference will be held in Building Y, leading practitioners and important Room YZ1 of Tilburg University, starting at international partners will teach mini 08.45. For further information, contact courses and lectures. Gerry Dietvorst ([email protected]). For updates on the program, check the conference Calendar 2005: website www.pensionresearch.org 21 April Tilburg Netspar Pension day 12 May Tilburg Netspar Pension day Partner Council Netspar 7 & 8 June Amsterdam Pension workshop The Partner Council offers a platform for 23 June Tilburg Netspar Pension day planning activities and for direct exchange 15 September Tilburg Netspar Pension day of knowledge and critical thought. The 6 October Tilburg Netspar Pension day following members will hold a seat in the 3 November Tilburg Netspar Pension day Partner Council, chaired by Netspar: Gerard 24 November Tilburg Netspar Pension day 15 December Tilburg Netspar Pension day Bosman (Mn Services), Reinoud van den Broek (Achmea), Maarten Camps (Ministry of Social Affairs and Employment), Hans Duijn The first Netspar Pension workshop will be (Fortis), Lex Hoogduin (DNB), Jan Nijssen organized on the 7th and 8th of June 2005 in (ING), Hans van Oijen (St. Instituut Gak), Amsterdam. Speakers will be Olivia Mitchell Robert Olieman (SVB), Joep Schouten (SFB (Wharton), Axel Börsch Supan (Mannheim), groep), Tom Steenkamp (ABP), Jan Tamerus and Wouter Bos (opposition party leader in (PGGM), Wouter Tol (ABN AMRO) and Guus the Dutch Parliament). For further Wouters (Interpolis). information, please contact the Netspar secretariat. Maarten Camps chairman of EMCO Maarten Camps, director of General Social Top Talent Recruited Economic Affairs at the Ministry of Social Six talented young researchers selected at Affairs and Employment, and member of the job market in Philadelphia (US), have the Partner Council of Netspar, has been already been recruited: Norma Coe (MIT), elected for a two-year period as chairman Joachim Inkmann (LSE), Bas Jacobs of the European Union’s Employment (European University Institute), Katherine Committee (EMCO). The EMCO is an important Carman (Harvard), Frederic Vermeulen advisory panel (for the EU’s Council of (Tilburg) and Gema Zamarro (CEMFI Madrid). Ministers) dealing with employment and the They will be involved in the research European Employment Strategy. Maarten activities of Netspar. (40) studied economics between 1983 and 1990 at the universities of Tilburg, Exeter Bovenberg most quoted (UK), and Rotterdam. According to the ‘ESB Polderparade’, Lans Bovenberg is again the most frequently quoted Dutch Economist in the Netherlands. In addition to Bovenberg, other senior researchers at Netspar hold the following positions in the ESB ranking: Coen Teulings (UvA, 3), Sylvester Eijffinger (UvT, 17) and Sweder van Wijnbergen (UvA, 18).

The cartoon, drawn by Dutch illustrator Hans van den Tillaart, will be a regular feature of Netspar News.