How People React to Pension Risk
Nicolas Salamanca (),
Andries de Grip () and
Olaf Sleijpen ()
No 13077, IZA Discussion Papers from Institute of Labor Economics (IZA)
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
New Economics Papers: this item is included in nep-age, nep-eur and nep-rmg
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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp13077
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