Too much choice confusing, says ABP chief
NETHERLANDS - Pension funds should limit the freedom of choice for new collective schemes, otherwise workers will face considerable financial uncertainties, says Dick Sluimers, deputy chair of the executive board at Dutch civil service scheme ABP.
"We should really question the wisdom whether much more freedom of choice is good for the participants," Sluimers stated, during an ABP seminar for pension experts.
At the meeting, the experts discussed the many choice workers who are approaching their retirement, need to make. They must for example decide on the exact year they want to stop working, on a part-time or a full-time pension, or to exchange a surviving relatives pension for a larger old-age pension or vice-versa.
On the new levensloop, or life-course, scheme, pension fund member are facing the choice between tax-friendly saving for intermediate leave, or for early retirement.
According to ABP, surveys have made clear that many workers have difficulties in making choices. Too often, their financial decisions turn out not the best ones, it indicated.
Pension funds should take their responsibility, by providing their members with understandable and honest tailor-made advice, both Sluimers and Heino van Essen - executive chairman of healthcare scheme PGGM - stressed.
Payment all at once of the built-up pension money at retirement, as is practice is some countries, is not the right choice, Arie Kapteyn of international think tank Rand Corporation, underlined.
"In these case, a short-term choice, turns out badly in the long run. This freedom of choice shouldn't be imposed on people," Kapteyn said.