According to this article, pension funds in the UK, the Netherlands and Germany face an “existential threat” because of their precarious financial positions:

Sven Giegold, a member of the European parliament from Germany’s Green party, called on lawmakers to abandon what he refers to as their short-sighted “ostrich-policy” approach to pension scheme funding.

His comments come in response to the results of the first stress tests of pension funds in 17 European countries by Europe’s top pension regulator.

The results show that pension schemes across these countries could face a combined funding shortfall of €773bn if confronted with a significant financial shock that triggered a further fall in interest rates and a rise in inflation.

On the other hand, Scandinavian countries seem to be in a better situation:

All four countries have also been carrying out reforms of their pension systems years in advance of many other developed economies. In addition to policies aimed at increasing the age at which workerscan retire and encouraging private pensions (central planks of pension reforms in many other countries), the Nordic countries have for several years been focusing on adjustments to the way their pension systems are funded. As mentioned above, Norway is using its oil and gas revenues to build up funds in the GPF-G. In the 1990s, Sweden reformed its pension system away from an expensive defined-benefit system to a defined-contribution system in order to contain costs amid concerns that the former system would be unsustainable as the population aged. Finland and Denmark have also accumulated large pension assets; according to the OECD these represented 75% and 49.7% of GDP in 2011, respectively. In the case of Denmark the current basic state pension is gradually being reduced in importance relative to a savings-based pension. Finland also has a combination of a basic state pension and a more dominant statutory earnings-related pension, and will be pursuing additional pension reforms in the next two years. These systems compare with the largely pay-as-you-go systems – viewed as unsustainable amid ageing populations – still in place in most other advanced economies.

Question: Are UK, the Netherlands and Germany considering pension fund reformation? Maybe using some of the methods that seem successful in the Northern countries?

  • 3
    You have got to define “success” here, with the exception of Norway and its oil, the methods used in the Nordic country basically amount to reducing pensions. That can still be done if and when pension funds in the Netherlands or elsewhere face an actual crisis. Your sources also prevent a very biased picture, the bit about pay-as-you-go pensions simply makes no sense on a macroeconomic level and the Dutch system at least is certainly not based mostly on this (and, in fact, very similar to the structure of the Danish and Finnish systems described in this article).
    – Relaxed
    Jul 20, 2017 at 22:13
  • All-in-all, it's a common rhetoric from people who are generally hostile to the welfare state in general. No matter the problem, changing demographics, transient budgetary problems, you name it, the solution is always less pension and a bigger role for financial products. That's not a very serious analysis.
    – Relaxed
    Jul 20, 2017 at 22:19
  • I'm voting to close this question as off-topic because the premise is false. In particular 'pension funds in [..] the Netherlands [..] face an “existential threat” ' is a gross misrepresenting of the actual situation.
    – Sjoerd
    Jul 22, 2017 at 14:25
  • 1
    The article is behind a paywall. However, German pensions are mostly not financed by funds. The largest thread to the German pension system is the growing proportion of retired people in the population. We've had a reform addressing this, retirement age has been increased. I suspect that if the trend to an older population should continue (birth rates are currently increasing though), Germany might simply fix that by encouraging immigration.
    – Roland
    Jul 22, 2017 at 15:48
  • "Finland and Denmark have also accumulated large pension assets; according to the OECD these represented 75% and 49.7%". By that standard the Dutch pension funds have enormous assets, at close to 200% GDP (1400 billion euro). This effectively also covers state pensions; those will be largely funded from taxation of other pensions.
    – MSalters
    Jan 29, 2019 at 11:00


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