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The Need for Flexible Take-Ups of Home Equity and Pension Wealth in Retirement

Two trends in retirement wealth components are being observed in the Netherlands, specifically in pension and housing wealth. Pension wealth will become more risky due to the gradual evolution of 2nd pillar pensions from defined benefit plans towards collective and individual defined contribution plans. These changes in plan type implies pension risks have to be borne increasingly by individual plans participants. Net home wealth at retirement on the other hand will become less risky as recently interest-only mortgages are forbidden.

10. februar 2016

This paper analyzes for the Netherlands the need to introduce  exible take-ups of home equity and pension wealth, complementary to recent reforms in Dutch pensions and mortgages. The young may gain from supplementing a possible pension shortfall with additional retirement income from reverse mortgage contracts. The elderly may benefit of the innovation of partial lump sum of accrued pension rights in order to partly redeem mortgage debt, whilst maintaining an adequate net replacement rate from pensions.