The Dutch appear to have figured out the obvious (which is
something that other countries repeatedly fail to do): keep it simple when it comes to retirement systems. Here are a few key aspects of the Dutch pension system, as reported in an excellent NYTIMES article:
“The Dutch system
rests on the idea that each generation should pay its own costs — and that the
costs must be measured accurately if that is to happen.
… The Dutch approach
bears little resemblance to the American practice of shielding the current generation
of workers, retirees and taxpayers while pushing costs and risks into the
future, where they can metastasize unseen.
…Dutch companies, as
well as public-sector employers, typically band together by sector in big,
pooled pension plans, then hire nonprofit firms to invest the money.
…The Dutch central
bank also imposed a rigorous method for measuring the current value of all
pensions due in the future. Pensions are not supposed to be risky, so the Dutch
measure them the same way the market prices very safe bonds, like Treasuries —
that is, by discounting the future payments to today’s dollars with a very low
interest rate.”