The ageing population, pensions and contractual savings

Since Malthus and the days of the long-term conceptions ofthe other classical econ­ omists - an era characterized so poignantly by W.]. Baumol as the magnificent dynamics - demography has not featured prominently in economics. Although admittedly post-war growth theories have always included the growth ofthe volume of labour as an exogenous variable in their considerations, this did not receive the explicit attention of economists. Analyses of the capital market tended even less to draw attention to or inspire interest in the demographic element, despite the fact that the savings behaviour ofindividuals is also determined by their life cycle, an interest­ ing demographic detail. This study by A.P. Huijser and PD. van Loo, staff members of the Econometric Research and Special Studies Department of the Nederlandsche Bank, is expressly based on expected demographic developments in the Netherlands until the year 2025. The study centres on the premise that the much-discussed ageing ofthe Dutch population will make heavy demands on the financing of old age pensions and on capital market supply, notably after the turn of the century. The link between pen­ sions and the capital market runs via the increase in the pension funds' premium reserve as the main component of contractual savings.