Distinct but Linked: Spillovers Between Pension and Non-Pension Investments

Alina Bartscher () and Katja Mann ()
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Alina Bartscher: Frankfurt School of Finance and Management
Katja Mann: Department of Economics, Copenhagen Business School, Postal: Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1. floor, DK-2000 Frederiksberg, Denmark

No 12-2025, Working Papers from Copenhagen Business School, Department of Economics

Abstract: More and more countries around the world switch from defined-benefit, pay-as-yougo pension systems to funded, defined-contribution systems. This implies substantial wealth accumulation, yet simultaneously exposes individuals to investment risk. While it seems natural to expect that individuals’ investment decisions in pension and non-pension accounts are related, there is little empirical evidence. We compile a new microdataset on Danish savers and document how pension and non-pension investment decisions are linked. We find substantial positive spillover effects between risk-taking in pension and non-pension investments. High-return pension savers also earn the highest return on their non-pension savings, driven by active risk choices. Pension and non-pension investment choices are often made at the same time. An important reason for this are joint responses to individual and aggregate events. Additionally, there are direct spillover effects from changes in stock market policies to pension savings behavior, and vice versa.

Keywords: Stock market participation; Pension savings; Portfolio choice; Return heterogeneity; Financial literacy (search for similar items in EconPapers)
JEL-codes: D14 E21 G11 G41 G51 J26 (search for similar items in EconPapers)
Pages: 75 pages
Date: 2025-12-08
New Economics Papers: this item is included in nep-age, nep-eur and nep-fle
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