The first phase in Kocken’s solution is to take a more holistic view of liabilities and investments. He argues that asset-liability modelling has its limitations; pension funds should consider their liabilities from a broader perspective than one focused on asset returns, and should integrate macroeconomic factors and market instability into their approaches.

 

The next phase concerns the convergence of defined benefit and defined contribution in a much more stable pension system. Kocken already sees this convergence aleady but thinks that a worthwhile and meaningful hybrid design will take at least another decade to achieve. “This is a very fierce but fruitful dialogue that has led to much more insight into what we need to change and what we need to retain from the old system,” he has said.

 

Kocken’s concerns range beyond financial risk. He also believes that the wants and needs of different generations should be harmonised or at least considered within a pension system: “The best means to avoid conflict between the generations is to build a hybrid pensions solution that combines the best aspects from each type of scheme, such as the risk sharing elements of a defined benefit arrangement and flexibility and transparency individual members enjoy in defined contribution plans.”

 

This philosophy has led to a number of initiatives both at Cardano and independently that Kocken has spearheaded. In 2001, he organised a seminar entitled Embedded Options in Pension Funds. The event outlined Kocken’s belief that pension fund designs were not up to the challenge of ageing populations and unstable financial markets. His book Curious Contracts, which advocates a redesign of pension structures, was published in 2006. Then in 2013 Kocken set up Cardano Education, which is dedicated to the risks pension funds face from financial uncertainty.

 

In 2014, he collaborated with Terry Jones of cult British comedy act, Month Python, on releasing a film, called Boom-Bust-Boom, which considers the notion and impact of financial booms and busts and how young people and the pensions world can avoid the fall-out from future financial catastrophes. As well as being CEO at Cardano, Kocken is also professor of risk management at the VU University in Amsterdam and it was chiefly in this academic capacity that he made the documentary. The film is a unique look at why crashes keep happening, combining expert insight, animation, puppetry and song to explain economics to all. “Boom Bust Boom proposes a simple idea - let’s adapt economics to human nature,” Kocken has explained.