Business Support for Private Pensions: The United States and the Netherlands Compared

Although private pensions offer advantages to business actors, such as the attraction and retention of skilled personnel, a number of factors common to most advanced political economies (high wages, ageing populations) have greatly increased the costs of traditional DB pension plans. Why does business in some political economies continue support generous and secure private pensions, but not in others? In this paper, I will compare and contrast two political economies with mature, three-pillar pension systems: the United States and the Netherlands. I argue that Dutch employers continue to support mandatory DB pensions, because of various “opt-outs” built into the system, including the hybridization of pension schemes and (limited) possibilities to switch pension providers. Employers and their interest organizations successfully fought for these opt-outs at various moments of crisis, when the long-term sustainability of the Dutch pension systems was challenged. In the paper, I will investigate three such historical moments and compare these to recent developments in the American private pension system, where an opposite trend can be observed: the expansion of mandatory participation in private pension schemes. The paper will end with a discussion of whether or not we are witnessing a convergence of the two pension systems.