Most Dutch plans link benefits to average wage

At the end of 2005, almost 80% of Dutch pension plans calculated benefits based on average salary, compared with 30% in 2000, said Bart van Riel, senior policy officer at the Netherlands Social-Economic Forum, The Hague. In average-wage plans -- known in the Dutch market as hybrids -- benefits are based on the member's average salary over the course of his or her working life at a specific employer. According to the paper "Sharing Risk: The Netherlands' New Approach to Pensions," the ratio of liabilities to total wages is expected to rise from about 2.5 today to 4.5 in 2030. This sharp increase will severely undermine the effectiveness of the contribution rate as a steering instrument.