“That aha moment when people understand the world a little better: that makes me happy”

Netspar director Marike Knoef strives for more pension knowledge

Drop the word “pension” and Marike Knoef will get genuinely excited. An unusual reaction in a country where most people seem to feel more emotion at the word “brick”. But that enthusiasm is the ideal attitude for Netspar’s general manager, whose mission is to convince the nation that retirement is definitely not a “we’ll think about it later” thing. More retirement literacy is what she aims for. “Because more than half of people are worried about their retirement.”

Is saving for later by definition a good idea? It depends, as Marike Knoef (39) discovered when she moved from her parents’ house in Lochem, Gelderland, to a student room in Tilburg. When she was clearing out the cupboards, she found a stack of origami sheets. Expensive paper, which she used to love folding into origami animals as a six-year-old. But now it dawned on her that she had saved three quarters of them “for later” and now she realizes that she would have been much better off enjoying them at the time. You can also put too much aside, she concluded. She likes to use those Japanese folding sheets as a metaphor when talking about retirement. She also did this in her inaugural speech when she was appointed as professor of empirical microeconomics. She also helped people visualize the differences between pension incomes by handing out a smaller or larger origami paper to everyone present.

Netspar

The key question for her, however, is: how do you distribute your financial resources in such a way that you benefit from them in all phases of life? “That is a challenging question. And one in which various scientific disciplines come together. There are the financial, economic and psychological sides, the work and health aspects - how long can you work? - and the communication about it also plays a role. That’s what makes it so fun and interesting for me.” Which is why she feels like a fish in water at Netspar, an independent think tank and research and knowledge network on pensions, of which she has been the general manager since 2020.

As director of Netspar, you are striving for more "pension literacy”. Why is that so important?

“Research done by Netspar shows that most people know very little about pensions. At the same time, over half are very concerned about it. Even so, for a large proportion of them, their pensions are in order. The only thing is, they’re not aware of it. If people gain a little more basic knowledge, you notice that their worries subside. Of course, you don’t need to know everything under the hood. But 40 percent of young people think that there will be no pension for them later. That really is a lot! If they knew a bit more about it, they could feel more at ease.”

But how do you get them interested?

“We also do research on that. How do you activate people, how do you improve communication? On the one hand, you want to reduce the worries that many people have. On the other hand, you want to inform them about their situation personally. We ourselves communicate little with 'the public'. Once in a while we hold a public event for all Dutch people, for example around the elections. And occasionally we organize information events for interest groups. With our research, we ensure that a debate can be held based on facts, rather than on 'gut feelings’. That is why it is important that our stakeholders - all the agencies involved in pensions - receive the information.”

So, who should inform the public? Is that the pension funds’ responsibility?

“The entire pension sector benefits if people know more about pensions. But it’s a shared responsibility; I also see a role for the government here. At the Ministry of Social Affairs and Employment, they’re working on a major campaign. For example, many people don’t even know that Mijnpensioenoverzicht.nl exists. I also noticed once again how low pension literacy is when I tested the questions for a new survey in my surroundings in advance. Both they and the representative group of Dutch people who took part in the survey turned out to have an even lower level of knowledge than I had expected. That was a bit of a shock to me.”

Spread the word, in other words. The Pension Federation now provides information to secondary school students. You yourself have visited elementary schools?

“This was an initiative of Leiden University, the Meet-the-Professor project. Professors visit grade 7 and talk about their field of study. I tell them a bit about pensions. When I drop the word, you see students thinking: oh... pension. But then I ask if they have ever collected anything. And was that too much or too little? They recognize that. They mention marbles, stickers. Nail polish, someone said. That’s how they get really interested: how have we set up that pension, how does it work? So perhaps you first need to get people over the threshold. The new pension system could be a good opportunity to make them more aware of the issue.”

That new pension system will, in principle, go into effect no later than January 1, 2027. What do you think its strengths are?

“You are really never done creating a pension system; it is a continuous process because the world is continuously changing. But I do think the new system is an improvement. There is more customization per age group, which better suits people’s situations. The old and the new pension systems are both sensitive to developments on the financial markets. However, the new system does offer better ways of dealing with this, through a more targeted allocation of financial risks. In the future, pensions will move more rapidly, in line with the financial markets. Young people may be exposed to more risk than older people. The new system will not necessarily be less complicated. But it will be more transparent, because everyone will be able to see what assets have been accrued for them. That transparency can help dispel some of the concerns young people have.”

The new pension system is also more uncertain. Benefits may start to rise or fall annually, depending on the financial markets.

“That’s a point I do worry about. Because we see that if pensions are cut or not indexed, this triggers emotional reactions. Losses hit twice as hard as gains, even if the total benefit increases over the years. Therefore, if this happens with spikes and drops, the perception of the pension can be much worse than it needs to be. Of course, there is some thought about whether you can spread out spikes and drops over time. That has advantages and disadvantages. Viewed purely from the perspective of people’s emotions, it would be best to take a major negative shock relatively quickly. So that you are not confronted with a spread-out loss for years on end, which becomes increasingly difficult to explain. Whereas from that perspective, it would be better to spread a major positive shock over multiple years, to create a cushion for future losses.”

Pension funds also determine the investment risk for the various age groups.

“The new Pensions Act (which is still being debated - ed.) therefore states that the risk attitude of participants must be measured every five years. How much risk are they willing and able to take? This naturally raises questions: how do you measure both people’s preference and their risk capacity? And how do you explain this in a comprehensible way? What does someone need to know to be able to answer that? After all, the balance between risk and return is an important decision.”

Netspar is now doing research on that risk appetite?

“A study is underway with APG at the pension fund for the construction industry. We are investigating whether we can make risk measurement more attractive by converting a boring scientific survey into a serious game. We’ll compare the results with those of a regular survey using three different measurement methods.”

Can you say anything yet about the outcomes?

“We have just shared the first results with the bpfBOUW board. We see the same patterns across the different survey methods for the difference in risk appetite by age, by high and low incomes, and by background - whether they are employees in the workshop or in the office. But the level of risk appetite does differ by method. That, too, raises questions: how should we deal with that?”

But the participants were willing to take risks anyway?

“Yes. Look, if you ask people on the street, they would say: preferably as much security as possible. They don’t like financial uncertainty. They prefer to opt for a fixed rather than a variable payment. Even if that rationale doesn’t necessarily give them the best results.

We have also conducted research into this: for most people, it really is better to take some risk. That increases the chance of a higher payout. Because security is expensive.”

The younger you are, the greater the risk appetite?

“That is indeed confirmed in our studies. We also see that in the international literature.”

But ultimately, fund directors make the choice.

“They determine how they are going to interpret their investment policy. They can make use of our research results in making that choice. Moreover, it is a good thing that participants’ risk appetites are measured every five years. You can’t just ignore the results. It is also an instant communication opportunity. If you explain the balance between risk and return in an accessible way, it can create mutual understanding. Incidentally, we see from the surveys that the composition of the board - how many men, women, young people, older people - also affects how much risk is taken.”

So, if there are three female thirty-somethings on the board...

“... you have a different outcome than if it were three men in their fifties. And that’s actually kind of insane, because you want the risk appetite to depend on the composition of a fund.”

Netspar also examines the risk capacity of participants?

“Yes, it does. The great thing is that Statistics Netherlands has a lot of data on the assets that people have, their second-pillar pension entitlements with various funds or insurers, their savings and real estate assets. This enables us to gain insight into the overall picture at an individual level - anonymously, of course. And what that looks like, for example, by sector, age and income bracket. The various sectors will also be able to use the research results in their choices later on.”

Unfortunately, some sectors will continue to be left out of the pension equation even in the new system.

“Yes, the self-employed for example. Particularly among middle-income earners, little pension is accrued. People with flexible contracts and employees in small companies, the SMEs, also accrue relatively little if anything at all.”

What do Netspar studies tell us about that?

“That one of the barriers again is a low level of knowledge about pensions. They don’t really know how it works. Only 50 percent of self-employed people are aware that there is a fiscal annual margin, several surveys show. You can save for a pension in a tax-friendly way, but many people don’t know about it or think it’s too complicated. On top of that, self-employed people more often have a variable income. They do want to save, but not in a pension product where they can no longer access their money if things go badly one year. That’s a difficult hurdle to overcome. After all, you don’t want people to be able to just take it out: then there will be no pension left later in life.”

You yourself have two part-time jobs: you are director of Netspar and professor of empirical microeconomics at Leiden University. What drives you?

“What drives me is a better old age for the Netherlands. That is also Netspar’s mission. It is important to gather both knowledge and know-how - people from science and practice in various disciplines - who will work together to achieve that mission. We obtain knowledge through research projects that are prioritized by Netspar’s partners. We share that information with various target groups, on three levels: quick up-to-date, practical application and in-depth knowledge. Quick up-to-date, for example, is just one page with the most important conclusions and policy indications. Or a low-threshold podcast.”

Is this being gratefully used?

“APG is one of our partners, and we work closely with several APG departments that do research themselves. But it seems to me, with other partners too, that we can reach even more employees with our research results. Because the insights are useful and relevant to everyone. That’s why we try to distribute our knowledge in the most accessible way possible. For example, through websites, social media, newsletters and so on.”

And network development is Netspar’s second goal?

“That is very important. Various stakeholders are involved in our network: pension funds, insurers, social partners, regulators, scientists, the government. We try to expand that network as much as possible. After all, all these types of organizations have their own role to play in pensions. We hear from each other what’s going on and tackle things together. And we share our knowledge. Before I was the director of Netspar, I did my own research: what exactly are the pension issues and are the research results relevant for practice, what is needed? As director, I can do that a bit more broadly, by connecting people with each other.”

In short: sharing and connecting; that’s your mission?

“Well, I also like to surprise people positively with science. Recently I gave a presentation and afterwards someone said to me, ‘Wow, I thought: Netspar, that’s probably going to be very difficult.’ But it was very interesting and relevant. And I got new ideas.’ That aha moment people have, when they understand the world a little better, and that this makes them feel good, that makes me happy. That is also what drives me.”