No Smoke, No Mirrors: The Dutch Pension Plan

Discussion in 'Politics, Religion, Social Issues' started by jnpy!$4g3cwk, Oct 13, 2014.

  1. jnpy!$4g3cwk macrumors 65816

    jnpy!$4g3cwk

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    #1
    This article is an interesting read. The Netherlands has largely avoided most of the problems that the U.S. has had.

    http://www.nytimes.com/2014/10/12/business/no-smoke-no-mirrors-the-dutch-pension-plan.html?action=click&contentCollection=N.Y.%20%2F%20Region&module=MostEmailed&version=Full&region=Marginalia&src=me&pgtype=article
     
  2. Southern Dad macrumors 65816

    Southern Dad

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    #2
    Imagine, each generation paying for its own retirement.
     
  3. Huntn macrumors G5

    Huntn

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    #3
    Are you countering or supporting the link?
     
  4. citizenzen macrumors 65816

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    #4
    According to this site, the Netherlands also has the highest minimum wage in the world.

    I tell you what. I'll accept the pension plan.

    Will you accept the minimum wage?

    And next, we can talk about total tax burdens.
     
  5. Southern Dad macrumors 65816

    Southern Dad

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    #5
    I've lived in the Netherlands, they also have a far higher cost of living. Will you pay their price for gasoline, electricity, etc? Houses are more expensive to purchase there, much more expensive. In addition, they don't exempt 40% plus from their income tax and they have a 20% VAT added into the price.

    It really won't matter what you want to accept, once no one will buy US debt, we will be in the same boat as Greece. Austerity will be fun.
     
  6. Huntn macrumors G5

    Huntn

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    #6
    Very interesting read. It illustrates that if we make people the priority and not "ME", "ME PROFITING", that pension plans can work. My impression is that they don't work because of the emphasis on investor profits over employee well being. I dont think that any society that dares to call itself a success should be structured so average people are required to work till they drop.
     
  7. citizenzen macrumors 65816

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    #7
    And you won't accept that their pension exists within a system. If you want people to pay more into it then you need to pay people more to support their lives.

    How would the Netherlands pension plan work with your desire to have no minimum wage and no social safety nets like food stamps?

    Show me the country where that plan is working.
     
  8. Southern Dad macrumors 65816

    Southern Dad

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    #8
    What do you mean that I won't accept that their pension system exists within the system? Did I say that? Are you able to read the words that I actually type or do you just attempt to read my mind? You deliberately posted something that I didn't say as if I said it.

    In The Netherlands, they have a higher cost of living, pay more in taxes. Yes, they work a shorter work week and have retirement. They also serve their beer warm, even though every Heineken can says "Serve Ice Cold" right on the side of it.

    When I lived in The Netherlands people who were on assistance were required to work. That's right, they cleaned up the city streets and parks for those checks. On another side, the students actually got paid after the age of 14 or 15 for going to school.

    But every month when you pay your rent and utilities you see that your money doesn't go very far.
     
  9. citizenzen macrumors 65816

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    #9
    Source please.

    Thank you.
     
  10. Southern Dad macrumors 65816

    Southern Dad

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    #10
    You were really hoping that I didn't have one, weren't you? Here's an interesting read. It's 25 pages long. I personally lived there and saw this with my own eyes. The work component is working for the municipality. We have a user on here who lives in The Netherlands. I'm sure he can give us more up-to-date enlightenment on it.

    Minimum income scheme: Work and Social Assistance Act

     
  11. citizenzen macrumors 65816

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    #11
    I'm hoping you have one.

    I'm interested in leaning how the Netherlands forces the old, infirm, handicapped and just plain idle to work.

    This should be interesting.
     
  12. Huntn macrumors G5

    Huntn

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    #12
    I guess you are not supporting the link. ;) Debt although related should be a separate subject from a structured pension system if it is being funded properly is it not? Debt builds when companies minimally fund their pension plans in favor of pocketing the money for investors and executives.
     
  13. Southern Dad macrumors 65816

    Southern Dad

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    #13
    Those over 65 and those handicapped are excepted. Those who are just plain idle are not. They even have a special category for artists. My neighbor was an artist. He worked for the city a certain number of hours and then did his art the remaining. Gas prices were so high, he used to let me borrow his car if I would fill it up on base. He had a Porsche.
     
  14. citizenzen macrumors 65816

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    #14
    From the Netherlands government site ...

    Looks like you're right about the Netherlands attempting to make "everyone" work.

    Now I need to find out the penalties for non-compliance, and find out what happens after three months.
     
  15. vrDrew macrumors 65816

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    #15
    Why would that happen?

    There are a host of fundamental economic reasons for that to be (at least for the foreseeable future) economically impossible.

    Unlike Greece, the United States issues - and is responsible for - its own currency. So our central bankers have the ability to raise or lower interest rates to suit our situation. More importantly still, the US Dollar is still the worldwide reserve currency - the one place pretty much the whole world looks to a secure place to park their savings.

    The British Pound Sterling still maintains some of that market power. And it has for well over two hundred years, including two World Wars that really, truly did bring Britain's finances to a state immeasurably worse than that of the US today.

    Our budget deficits are, relative to the size and vibrancy of our economy, a fraction of what Greece (or Spain, Italy, or Ireland) had. Plus we control our own currency, which happens to be the preferred global reserve currency. The chances of people worldwide deciding to "stop lending us money" simply don't exist. The reasons for this are numerous, but the most important is this:

    Most of the buyers of US debt are either US residents, or people with extensive economic interests in the US. They aren't going to stop buy that debt, because it remains the best, most reliable option for their excess cash.
     
  16. citizenzen macrumors 65816

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    #16
    Found this report on the Netherlands in the Council of Europe, European Social Charter, European Committee of Social Rights ...

    So according to the EU, [as I interpret it] you can penalize those who don't put in a good faith effort to seek and maintain work [by reducing benefits] but you cannot deprive the individual of a means of subsistence.

    So let's look at Article 13 as mentioned above.

    So it would seem to me that if the Netherlands wishes to continue their membership in the EU, then they cannot abandon their citizens to simply fend for themselves and must provide some assistance regardless of a persons unwillingness to work.
     
  17. tgara macrumors 6502a

    tgara

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    #17
    But the investors ARE the employees.

    The reason some pension plans do not work is that the are built on false assumptions and promises that cannot be kept. This is especially true in the public sector with defined benefit plans. If you care about people, you will be totally against these as they currently operate. They are bad for the taxpayers, the workers, and especially the retirees. Just look at Detroit as an example. Their pension fund is so underfunded, it cannot even pay out decent amounts to current retires who worked for years and based their retirements on promises made by the city. Tragic.

    After the 2008 market collapse, it looks like the Dutch used a similar system, but got religion in order to keep the whole system from caving in:

    Its not clear to me whether the Dutch system is being compared to a defined benefit plan (largely used by states and municipalities) or a defined contribution plan (used my most private corporations in the US these days). From the text, there appears to be a lot of criticism of the defined benefit plan, as there rightly should be.
     
  18. Happybunny macrumors 68000

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    #18


    The Pension Funds that are outlined in the article, are the Pension Funds for employees who fall under the CAO, for employees above CAO there was always Private Pension Funds.

    What has been written about the WWB is correct on paper, but it is how it’s put into practice by the various Town and City councils.The plans for this law were drawn up in 2009, and then the crisis hit, these plans while still law are not applied everywhere with equal vigour.
    These can vary quite dramatically but the idea of getting people back to work is a huge improvement over how it was in the 1980-1990’s. One of the side effects is that WWB’s are used as cheap subsidised labour, and stop other people getting a full time job.
    Up until a year ago people in long term unemployment over the age of 57yrs were given a free pass. Now that the economy is starting to improve there maybe will be a change in implementation.


    The penalties for non cooperation is a cut in the WWB payment, but here lies a snake in the grass, if the cut is to big the family or individual falls below the poverty line, and therefore can claim extra benefits.


    The average cost for a family of three for Gas and Electricty is €160 per month.

    ----------

    While that is true our houses are built of stone, bricks and cement, and therefore last longer.
     
  19. VulchR macrumors 68020

    VulchR

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    #19
    Not while the baby-boomers hold sway (I consider myself Gen X)...

    Personally I have saved for a pension, but I doubt it will be enough. When it all runs out, I'll simply do the honourable thing: end my life.
     
  20. jnpy!$4g3cwk thread starter macrumors 65816

    jnpy!$4g3cwk

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    #20
    Generally speaking, either one can work, if the rules are followed. In the U.S., I would agree (with many fiscal conservatives) that defined contribution plans which are owned by the employee work better than defined benefit plans which are funded by the employer-- unless the employer goes bankrupt, the fund goes bankrupt because the employer withdrew a lot of money when returns were high (claiming the fund was "overfunded", etc.)

    What I like about the defined contribution plan is that it is typically owned by the employee, who can take it with him when he leaves the company.
     
  21. Meister Suspended

    Meister

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    #21
    Now that wouldn't sit well with the socialists.
    They want everybody to be in each others business and dependent on the state.
    We don't want self reliant people now do we? ;)
    Let's all hail the european socialist paradises where people are free and equal!

    Happy Lenin day! And a free pickle for each child.
     
  22. zin macrumors 6502

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    #22
    The idea is that the workers of today help to pay for your retirement, just like when you were working you helped to pay for somebody else's. Personal contributions will undoubtedly have to rise due to changing demographics but overall it's a good system that works.

    Nobody but the rich would be able to afford a reasonable standard of retirement if everybody paid for their own retirement.

    This is not a socialist conspiracy. There is nothing socialist about it.
     
  23. tgara macrumors 6502a

    tgara

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    #23
    Agree with respect to defined contribution plans, owned by the employee is best. Good all around, plus tax deferral.

    The problem with defined benefit plans is that even if the rules are followed, the assumptions used for market return, etc. are usually quite flawed and lead to bad results. Also, with respect to government plans, its up to them to actually put money into the funds. In many cases, due to budget shortfalls or unrealistic market expectations, those funds are not deposited, and instead they issue IOUs. The result is paper façade for each and every employee, plus a huge liability for the government (and the taxpayer who must ultimately pay for all this). Better for the employer (public OR private) to make a contribution and/or profit share for the employee each year, using present dollars, and be done. Better for the employee (real money in his account), and more predictable for the employer (don't have to worry about future values, etc.)
     
  24. Meister Suspended

    Meister

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    #24
    Aren't you the individual who wants everyone to be surveilled? Why am I not surprised? ;)
     
  25. Huntn macrumors G5

    Huntn

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    #25
    I admit that there are many factors that effect the viability of a pension system, one of them being management decisions for the future of the company and their funding priorities.
     

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