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Better alignment of pension, mortgage and home-ownership gives consumers more financial flexibility

Published: 03rd October 2019 Last updated: 03rd October 2019

Homeowners can see their pension income grow by as much as 25% if they can use the capital that is now set in stone earlier. However, the possibilities for making such financial choices are still limited and, moreover, unknown. The opportunities and risks of different loan and sale structures are complex and difficult for consumers to oversee. These are the findings of Tilburg University researchers Dirk Brounen and Eduard Ponds, together with Niels Kortleve (PGGM pension fund) in a Netspar studie.

Financial products in which pension, home-ownership and mortgage are aligned - as financial lego blocks - increase the possibilities for consumers to better spread their income and assets over the life cycle. This requires cooperation between government, pension funds, insurers, mortgage providers and consumer organizations.


Many Dutch people are currently building capital through their pension and their own home, but this is usually done passively. That capital is accumulated and not always used at the desired moments in life. This could be done differently, since the Dutch government promotes more active financial planning within households. To make that possible, households could use some guidance to get started with their own financial building blocks.


There are already opportunities to cash in on property, but there are costs and risks involved, which are difficult for many to oversee. Moreover, cashing in the house often only takes place after retirement, as a result of which people first sit tight for years and then end up in excess. Previous Netspar research shows that the distribution of assets over the life course is often not optimal. And that better distribution of consumption and better accrual and dismantling of pension and housing assets can lead to welfare gains.


The researchers therefore argue for a broadening and renewal of the options to coordinate pension, house and mortgage, so that every Dutch person can organize his own life course more flexibly. Clear and unambiguous communication with households about the possibilities (and risks) to cash in on their property is a requirement.

More information: contact Dirk Brounen or Eduard Ponds