“Ageing will be the determining factor”

At first glance, the Dutch economy appears to be in a reasonably good position. Incomes are rising, unemployment is low, and growth is holding up. Yet beneath the surface, developments are taking place that, according to CBS chief economist Peter Hein van Mulligen, will have a profound impact in the long term. He is referring in particular to population ageing. “This is a structural factor that is permanently changing economic relationships.”

The pension sector involves many stakeholders, from social partners, administrators, and policymakers to supervisors. What is their specific role? How do they view the sector? How do they see and respond to the reformed system? In the Krachtenveld section, these parties share their perspectives.

At the PensioenLab event last Thursday, Van Mulligen outlined to young pension professionals and board members how demography, trust, and economic choices come together in the discussion about the future of pensions. “Dutch incomes have risen in recent years, even when inflation is taken into account. At the same time, consumption growth has lagged behind. While higher incomes would normally lead to increased spending, that relationship has weakened in recent years”, says the chief economist.

Households are increasingly choosing not to spend additional income, but to save it. “There is now more than 500 billion euro collectively in Dutch savings accounts. That balance has increased significantly in the past year alone.” According to Van Mulligen, this is economically remarkable. “When people have more to spend, they usually spend more”, he explains. “That is happening less now, which means economic growth is lagging behind what could be achieved.”

Trust remains structurally low

According to Statistics Netherlands (CBS), the explanation for this restraint lies primarily in low consumer confidence. This has been negative for years and is at a historically prolonged low level. “Even during previous economic crises, such as in 2008, confidence did not remain negative for as long”, says Van Mulligen.

Expectations regarding inflation play an important role in this, he acknowledges. “Although inflation has declined from its peak during the energy crisis, many people expect prices to rise again. That expectation influences behaviour: households remain cautious with spending and maintain a financial buffer. This combination of rising incomes and low confidence results in an economy that is growing, but less dynamically than it could be.”

Fewer workers, more retirees

However, according to Van Mulligen, the most fundamental development lies in demography. “The Netherlands is ageing rapidly, and this has direct consequences for the economy and the pension system.” The ratio between working people and retirees is changing quickly. In the 1950s, there were seven people of working age for every retiree. Today, that ratio is around three to one, and towards 2040 it will shift further to approximately two to one.

“This shift is structural. The share of people aged 65 and over will increase to about a quarter of the population and then remain at that level. This means that relatively fewer workers will bear the costs for a larger group of older people. For the pension system, this is a core issue: how do you distribute resources between generations when the balance changes permanently?”

Productivity as the key
Because the labour market is already tight, Van Mulligen sees little scope to further increase the number of working hours. The solution must therefore come from higher productivity. “Producing more per hour worked is ultimately the only way to increase or preserve our prosperity.” This requires investment in technology, innovation, and the organisation of work. He notes that companies have, for some time, been investing a smaller share of their profits. In the long term, this may hamper productivity growth. He also points to a structural effect of ageing. “In countries with an older workforce, innovative capacity tends to decline. Younger generations traditionally play an important role in this.”

While new technologies, such as artificial intelligence, may contribute to productivity growth, Van Mulligen notes that the extent of that impact remains uncertain.

Pressure on healthcare and the housing market

The consequences of ageing are not limited to the labour market and productivity. They are visible across multiple sectors. In healthcare, demand is rising sharply, partly due to the growing number of older and particularly very elderly people in need of care. “Currently, about one in six people in the Netherlands works in healthcare. Projections suggest that the demand for healthcare workers could rise to one in four in the coming years”, Van Mulligen calculates.

Ageing also affects the housing market. The number of households is increasing, mainly due to the growth in single-person households. This growth is largely driven by older people. “Many older people are living independently for longer, often in larger homes. This limits mobility within the housing market and further increases pressure. Even without population growth, this tension will remain.”

Direct relevance for pensions

Taken together, these developments directly affect the foundations of the pension system. A shrinking group of workers, higher collective costs, and a larger group of retirees are putting increasing pressure on financial relationships. Van Mulligen: “This means that choices are needed about how resources are allocated, how risks are absorbed, and how the economy retains sufficient resilience. Pensions are not isolated but are part of a broader system of work, care, and prosperity.”

Van Mulligen’s message is therefore clear: the economic starting position is solid, but underlying trends require adjustment. Ageing, low productivity growth, and persistently low confidence are putting lasting pressure on the balance between generations. For that reason, he argues, it is essential to start considering long-term choices now. Not only about pensions themselves, but also about how work, healthcare, and prosperity will develop. At a meeting where young professionals are actively thinking about the future of the system, his analysis underlines one key point: there is still room to steer, but it is not unlimited.