How People React to Pension Risk

Nicolas Salamanca, Andries de Grip and Olaf Sleijpen (o.sleijpen@maastrichtuniversity.nl)

No 13077, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We show that people exposed to greater pension risk are less likely to invest in risky assets. We exploit a reform that links people's future pension benefits to their pension funds' funding ratio—a measure of the fund's financial health—making funding ratios a fund-specific measure of pension risk. The effect of pension risk is stronger for people who are better informed about their pensions, for retirees and pension-age non-retirees, and for wealthier people. The funding ratio does not affect investments in a pre-reform period, nor does it affect bequest intentions, (expected) retirement, or the motivations for saving.

Keywords: individual portfolio choice; background risk; retirement planning; pension reform; The Netherlands (search for similar items in EconPapers)
JEL-codes: D14 J22 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2020-03
New Economics Papers: this item is included in nep-age, nep-eur and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://docs.iza.org/dp13077.pdf (application/pdf)

Related works:
Working Paper: How People React to Pension Risk (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp13077

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
library@iza.org

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte (hinte@iza.org).