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Do mandatory pensions decrease household savings? Evidence for the Netherlands

Rob Euwals
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Rob Euwals: IZA Bonn

No 99-17, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: The Dutch mandatory pension system consists of two parts; a collective pay-as-you-go part which provides a minimum income to all Dutch inhabitants over age 64, and an occupation specific capital funded part which provides supplementary retirement income. Although the discretionary household savings in the Netherlands are high, the pension system might have a depressing effect. In this paper we test for the effect of mandatory pensions on discretionary household savings. The data are drawn from the CentER Panel, which consists of a representative and a highest-income-decile sample of the Dutch population. The panel contains rich information on household wealth, pension rights and savings attitudes. An empirical analysis gives that the impact of the collective part is not well identified. Better identified is the effect of the occupational pensions. They have a significant negative impact on savings motives with respect to old age. For the effect on household wealth, evidence is mixed; only for the highest-income-decile sample we find a significant negative impact of the occupational pensions.

Pages: 31 pages
Date: 1999-03-15
Note: Financial Support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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