Eduard Ponds

Eduard Ponds
Tilburg University | UVT · Department of Economics

PhD

About

118
Publications
11,727
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763
Citations
Introduction
Eduard Ponds holds the chair of Economics of Pensions at Tilburg University. He is also employed at the Dutch pension service provider APG (www.apg.nl). He has introduced two widely used innovations for the Dutch pension fund sector, first the indexation ladder as tool to define conditional indexation by Dutch pension funds, and secondly the method of value-based ALM (generational accounting) to detect generational transfers within pension plans in case of changes in the design or funding.
Additional affiliations
January 2007 - present
Tilburg University
Position
  • Professor (Full)
September 2001 - August 2006
University of Amsterdam
Position
  • Professor (Assistant)
October 1995 - present
APG
Position
  • Research
Education
September 1992 - October 1995
Tilburg University
Field of study
  • Economics
September 1977 - August 1984
Tilburg University
Field of study
  • Economics

Publications

Publications (118)
Preprint
Full-text available
In many countries, both pay-as-you-go (PAYG) and funding are used to finance pensions, although the balance between the two principles differs a lot between countries. Over the last decades, many countries made a gradual transition to more funding. In this paper, we develop an analytical framework that includes three models of pension design, allow...
Article
Full-text available
Veel huiseigenaren hebben nu, en zeker in de toekomst, een stijgend netto inkomen rond pensionering doordat ze vanwege een afgeloste hypotheek lage woonlasten hebben. Het pensioenvermogen en de netto waarde van een eigen huis zijn belangrijke componenten van het vermogen van Nederlanders met een koophuis. Flexibele beschikbaarheid van dat vermogen...
Article
Full-text available
Pensioenaanvullingen uit het eigen woningbezit Nederland is een vermogend land, maar veel van dit vermogen zit in pensioenen en stenen. Vandaar dat het kabinet in het regeerakkoord heeft aangegeven om meer mogelijkheden te willen creëren voor het flexibel opnemen van het pensioenvermogen (via een eenmalige uitkering bij pensionering) en om de samen...
Article
We present empirical evidence that municipal bond yields are increasing in both the explicit debt and the unfunded pension liabilities of U.S. state civil servants. However, the positive yield effects of both types of debt are found only for the period since the start of the global financial crisis. A potential explanation is that the crisis trigge...
Article
Full-text available
We report the effects of framing settings in annuity demand after conducting a survey-based experiment with members of a Dutch occupational pension plan. We gave participants the option to allocate up to 20% of their projected pension accrual to a lump sum. In particular, we investigated the joint effects of consumption and investment frames and ga...
Article
Full-text available
This paper stems from the observation that there are two worldwide trends, pension reform and population ageing, and asks whether the two may be related. Exploring the cases of pension reform in different countries, we find that, although they are very different, the cases share a common characteristic: they shift risks away from workers towards th...
Article
We work with a multi-period system where a finite number of agents need to share multiple monetary risks. We look for the solutions that are both Pareto efficient utility-wise and financially fair value-wise. A buffer enables the inter-temporal capital transfer. Expected utility is used to evaluate the utility, and a risk-neutral measure is essenti...
Article
We explore how the contract values of the various stakeholders of a typical US state civil servants pension fund are affected under the continuation of current policies and under alternative policies, such as changes in contribution, indexation and investment allocation policies. We find that all participant cohorts derive a substantial net benefit...
Conference Paper
Full-text available
We report the effects of framing and default settings in annuity demand after conducting a survey-based experiment with over 3,000 members of a Dutch occupational pension plan. The participants were asked to allocate their real projected pension accrual between a life annuity and a partial lump sum. In particular, we investigated the joint effects...
Research
Full-text available
This paper provides an in-depth comparison of funded pension savings plans around the world. The large variety in plan designs is a reflection of historical, cultural and institutional diversity. We postulate a new classification of four role models of funded pension plans, primarily based on choice architecture and type of regulation. We illustrat...
Article
Full-text available
Wat kan Nederland leren van kapitaalgedekte pensioenstelsels in andere landen? Dat is de centrale vraag in deze Netspar Brief. De rol van de overheid, de sociale partners en de individuele deelnemers verschilt internationaal. In deze Brief onderscheiden we vier prototypen: het Provident Fund model (Maleisië, Singapore) met vergaande regelgeving doo...
Article
Full-text available
Pensioen op maat kan deels al binnen de bestaande verplichte pensioenregelingen van pensioenfondsen georganiseerd worden, vooral in de fase van pensioenopname. De geboden mogelijkheden voor keuzevrijheid worden tot op heden nog beperkt gebruikt. Tijdens de fase van pensioenopbouw conflicteert keuze met name met een collectief systeem als deelnemers...
Article
We work with a multi-period system where a finite number of agents need to share multiple monetary risks. We look for the solutions that are both Pareto efficient utility-wise and financially fair value-wise. A buffer enables the inter-temporal capital transfer. Expected utility is used to evaluate the utility, and a risk-neutral measure is essenti...
Article
Full-text available
This paper provides an in-depth comparison of funded pension savings plans around the world. The large variety in plan designs is a reflection of historical, cultural and institutional diversity. We postulate a new classification of four role models of funded pension plans, primarily based on choice architecture and type of regulation. We illustrat...
Article
Full-text available
We explore the benefits of intergenerational risk-sharing through both private funded pensions and via the public debt. We use a multi-period overlapping generation model with a pay-as-you-go pension pillar, a funded pension pillar and a government. Shocks are smoothed via the public debt and variations in the indexation of pension entitlements and...
Chapter
Full-text available
Pensioen op Maat: Heterogeniteit en individuele keuzevrijheid in pensioenen Pensioen op Maat: Heterogeniteit en individuele keuzevrijheid in pensioenen 1 Benedict Dellaert en Eduard Ponds, 23 september 2014 Welke keuze-aspecten kunnen worden ingebracht in de Nederlandse tweede pijler pensioencontext? Hoe komen wij op een gebalanceerde wijze te kome...
Article
This paper compares the UK and Dutch occupational defined-benefit pension policies using the holistic balance sheet (HBS) framework. The UK DB pension system differs from the Dutch one in terms of the steering tools and adjustment mechanisms. In addition to the sponsor guarantee, the UK system has the protection from the Pension Protection Fund (PP...
Article
We explore the financial sustainability of a typical U.S. state civil servants pension fund under the continuation of current policies and under alternative policies, such as changes in contribution, indexation and investment allocation policies. Applying the value-based asset-liability management method, we find that all participant cohorts derive...
Article
Most public-sector pension plans in the United States provide quite generous defined benefits. Long-term projections show that full payment of these promises threatens the finances of many state and local employers, which implies that taxes will have to be increased or pensions and/or other public expenditures reduced. This article analyzes the eff...
Article
This paper explores the financial sustainability of a typical U.S. state defined-benefit pension fund under the continuation of current policies and under alternative policies, such as alternative contribution, indexation and investment allocation policies. We explore the "classic" asset-liability management (ALM) results, which indicate that a pol...
Article
This paper explores the optimal degree of funding of public sector pension plans. It is assumed that a benevolent social planner decides on the contribution of current taxpayers to the funding of public sector pensions next period, weighing the interests of current and future tax payers. Two elements play a role in the optimal funding decision: the...
Article
Full-text available
This paper explores the optimal degree of funding of public sector pension plans. It is assumed that a benevolent social planner decides on the contribution of current taxpayers to the funding of public sector pensions next period, weighing the interests of current and future tax payers. Two elements play a role in the optimal funding decision: the...
Article
Full-text available
The European Commission (EC) plans to revise the IORP Directive in order to introduce a harmonized framework of quantitative requirements for European pension funds. The so-called 'holistic balance sheet approach' is advised by EIOPA, which enables regulators to compare various pension systems across Europe in one framework. A holistic balance shee...
Article
Full-text available
The European Commission (EC) plans to revise the IORP Directive in order to introduce a harmonized framework of quantitative requirements for European pension funds. The so-called 'holistic balance sheet approach' is advised by EIOPA, which enables regulators to compare various pension systems across Europe in one framework. A holistic balance shee...
Article
This article examines the impact of participants’ age distribution on the asset allocation of Dutch pension funds, using a unique data set of pension fund investment plans for 2007. Theory predicts a negative effect of age on (strategic) equity exposures. We observe that a 1-year higher average age in active participants leads to a significant and...
Article
Most countries have separate pension plans for public‐sector employees. The future fiscal burden of these plans can be substantial as the government usually is the largest employer, pension promises in the public sector tend to be relatively generous, and future payments have to be paid out directly from government revenues (pay‐as‐you‐go) or by fu...
Article
ResumenLa mayor parte de los países tienen planes de pensiones separados para los empleados del sector público. La carga fiscal futura de estos planes puede ser importante, ya que el gobierno es, por lo general, el mayor empleador, los compromisos de pensiones en el sector público tienden a ser relativamente generosos y los pagos futuros proceden,...
Article
RésuméLa plupart des pays disposent de plans de pension distincts pour les employés du secteur public. La charge financière qu'ils représenteront à l'avenir risque de se révéler très lourde car l'Etat est généralement le principal employeur, les promesses de pension du secteur public sont généralement relativement généreuses et les versements seron...
Article
AuszugDie meisten Länder haben für die Angestellten des öffentlichen Sektors separate Rentenpläne. Die zukünftige Belastung des Staatshaushalts durch diese Rentenpläne kann beträchtlich sein, da der Staat gewöhnlich der größte Arbeitgeber ist, die Rentenversprechen im öffentlichen Sektor tendenziell relativ großzügig sind und zukünftige Zahlungen d...
Article
Full-text available
The Dutch pension fund system, considered among the best in the world, successfully combines a first-pillar flat-rate pension for all residents with a labor-related second pillar and voluntary savings accounts as the third pillar. This paper describes the main institutional characteristics of the Dutch pension fund system and its evolution over the...
Article
Full-text available
We study the impact of human capital on life-cycle portfolio choice using Dutch data. A distinction is made between the riskless view of human capital as having bond-like characteristics, and the risky conception of future wage income having stock-like properties. As in Benzoni, Collin-Dufresne, and Goldstein (2007) we study the welfare implication...
Article
Full-text available
The beneficiaries of a corporate defined benefit pension plan in financial distress care about the security of their promised pensions. We propose to value the pension obligations of a corporate defined benefit plan using a discount rate which reflects the funding ability of the pension plan and its sponsoring company, and therefore depends, in par...
Article
Dit paper doet verslag van een studie naar de mogelijke intergenerationele herverdeling binnen de 2e pijler pensioenen die kunnen optreden bij de implementatie van de voorstellen uit het Pensioenakkoord. De conclusie is dat niet zonder meer gesteld kan worden dat de voorstellen van het pensioenakkoord leiden tot het systematisch bevoordelen of bena...
Article
This paper develops a pension product that is explicit about the pre-established goals that are aimed for. The proposed product presents a trade-off that is transparent in terms of required contributions, the income level targeted and guarantees offered. Depending on participants' preferences, individualized investment plans are constructed that fo...
Article
Full-text available
Most countries have separate pension plan for public sector employees. The future fiscal burden of these plans can be substantial as the government usually is the largest employer, pension promises in the public sector tend to be relatively generous, and future payments have to be paid out directly from government revenues (pay-as-you-go) or by fun...
Article
We analyze whether a low funding ratio of a pension fund can create incentives for individuals to leave this fund and save for retirement on an individual basis. Furthermore, we explore how these incentives differ per age. The recent crisis has led to a large drop in funding ratios of many pension funds, which raises the question whether for a cert...
Article
We study the impact of human capital on life-cycle portfolio choice using Dutch data. A distinction is made between the riskless view of human capital as having bond-like characteristics, and the risky conception of future wage income having stock-like properties. As in Benzoni, Collin-Dufresne, and Goldstein (2007) we study the welfare implication...
Article
Full-text available
The paper deals with the question of whether it is possible to combine the insights and recommendations of optimal individual lifecycle investing with the proven gains of defined benefit pension funds. These gains primarily stem from cost efficiency and (intergenerational) risk sharing. We investigate this subject for a concrete case, the pension f...
Article
The paper deals with the question of whether it is possible to combine the insights and recommendations of optimal individual lifecycle investing with the proven gains of defined benefit pension funds. These gains primarily stem from cost efficiency and (intergenerational) risk sharing.We investigate this subject for a concrete case, the pension fu...
Article
Full-text available
De bijdrage typeert de discussie rond het nieuwe pensioencontract aan de hand van twee kernthema's, te weten: wel of niet risicospreiding in de tijd en wel of niet leeftijddifferentiatie in de pensioentoezegging. Op basis hiervan wordt een viertal typologieën van pensioencontracten onderscheiden waar het huidige contract in de toekomst naar toe kan...
Article
Full-text available
There is a worldwide trend to substitute defined contribution pension plans for defined benefit plans, which are typically indexed to wage or price inflation. A problem with this development is that participants in defined contribution plans have limited access or no access at all to inflation-linked assets, especially wage inflation-linked claims....
Article
Full-text available
Worldwide there is a trend to substitute funded DC plans for (price-indexed and wage-indexed) DB plans. However participants in DC funded pension plans have limited access or no access at all to in ‡ation linked assets, especially wage in ‡ation linked claims. This paper demonstrates the creation of an internal swap market helps to overcome the mar...
Chapter
We demonstrate how the methodology of value-based generational accounting reveals the position of various generations for any institutional arrangement sharing revenues and losses with current and future generations. The illustration in this section is based on a stand-alone pension fund with intergenerational risk sharing, but can also be applied...
Chapter
Full-text available
Governments in various countries are holding large pools of resources managed for public goals. These pools are known under different names, like sovereign wealth funds, public investment funds, pension funds, saving funds, intergenerational funds and so on, reflecting their different historical roots and orientation. Mitchell et al. (2008) make a...
Article
Full-text available
Pension plan sponsors in the Netherlands are facing their second funding challenge in the past decade, this one more severe than the first. Following the economic crash in 2008-2009, the funding levels of most plans fell below the 105-percent threshold set by the Dutch supervisor, De Nederlandsche Bank, which requires recovery of the minimum fundin...
Article
Pension funds in the Netherlands face the second solvency crisis within a period of six years. As most Dutch pension funds effectively are arrangements of intergenerational risk sharing, especially the larger sector pension funds, the necessary recovery process implies various generational dilemmas. We distinguish various policy options, among them...
Article
New accounting rules and increased scarcity of risk capital have led to growing pressure on corporations to shift pension plan risk from employers to participants. This implies a shift from defined benefit plans to a variety of collective and individual defined contributions plans. Most of these shifts have been ad hoc and not based on clear and ob...
Article
Full-text available
The solvency crisis in 2001 2004 urged Dutch pension funds to reconsider their final-pay plans with de facto unconditional indexation. Most pension funds switched to an average-wage plan with solvency-contingent indexation. This pension plan redesign was the outcome of a new compromise between the major stakeholders of Dutch pension funds. The rede...
Article
Full-text available
We study risk sharing between generations for a variety of realistic collective funded pension schemes, where pension benefits and contributions may depend on the funding ratio and the asset returns. The collective pension schemes organizing intergenerational risk sharing are optimized with respect to generosity of pension benefits, asset allocatio...
Article
Full-text available
Differentiatie naar leeftijd in de financiering van collectieve pensioenen nea 7 differentiatie naar leeftijd in de financiering van collectieve pensioenen Roderick Molenaar en Eduard Ponds verkennen in dit paper de mogelijkheden om bij de Nederlandse pensioenfondsen het pensioen-en beleggingsstelsel te differentiëren naar leeftijd. Uiteraard diene...
Article
Full-text available