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What Triggers Early Retirement? Results from Swiss Pension Funds

Monika Bütler (), Olivia Huguenin and Federica Teppa

DNB Working Papers from Netherlands Central Bank, Research Department

Abstract: Early retirement is predominantly considered as the result of incentives set by social security and the tax system. But people seem to retire early even in the absence of such distortions as the Swiss example demonstrates. We look for determinants of early retirement, in particular the role of lifetime income and family status, using individual data from a selection of Swiss pension funds. Our findings suggest that affordability is a key determinant in retirement decisions: More affluent men, and to a much smaller extent women, tend to leave the work force earlier. The fact that early retirement has become much more prevalent in the last 15 years is another indicator for the importance of affordability as Switzerland's funded pension system has matured over that period leading to higher effective replacement rates. We also find sizeable differences in retirement behavior across marital status. These may be explained by a constrained rational choice based on differential mortality and the desire of couples to coordinate their entry into retirement. JelClassification: D91, H55

Keywords: Occupational Pension; Retirement decision; Duration models (search for similar items in EconPapers)
JEL-codes: D91 H55 (search for similar items in EconPapers)
Date: 2005-05
New Economics Papers: this item is included in nep-dge and nep-pbe
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