Freedom of choice within pension schemes and variable benefits

On Thursday April 26, Netspar will host a taskforce at Leiden University regarding the above mentioned subject. More information on the program and paper can be found after this.

Effective communication of the Dutch “law Improved Pension Plans”
Marijke van Putten, Marc Turlings, Rogier Potter van Loon, Eric van Dijk

From September 1st 2016, a new law passed in The Netherlands which allows participants of Defined Contribution plans to continue investing their pension capital after retirement date. We focus on how best to encourage participants to gain more insight in their pension plans and how best to explain the pros and cons? In the current research we report the data of two field studies among participants of two major pension organizations in the Netherlands. Participants received a letter or email explaining the new law either in terms of potential gains, potential losses, or in terms of what other participants might gain. The results show that a) participants in the loss frame were more likely to visit the website explaining their situation than participants in the other frames, b) were more likely to actively change their current situation according to the new law; and c) their new choice was not necessarily more or less risky than before. Participants in the gain frame did not differ from participants in the control frame. These findings are the first that show the effect of framing on pension choices – i.e. real behavior. This research makes a valuable contribution to the literature which mainly looks at the effect of framing on perceptions (e.g., risk perceptions) or intentions (e.g., click through to website with more info).

The design of freedom of choice and customization within pension schemes
Marike Knoef, Jim Been, Roel Mehlkopf, Casper van Ewijk


There is a lot of discussion about (too) much financial pressure for young households, a difference in the optimal pension ambition between homeowners and renters, and a minimum pension contribution for self-employed people. With more freedom of choice, more flexibility is created to adjust pensions to personal situations. However, we also know from behavioral economics that short-sightedness gives reason to make pension contributions mandatory. In this project we investigate the consequences of freedom of choice and customization. We build upon Van Ewijk and Mehlkopf (2014) and Knoef, Been, Caminada and Goudswaard (2017). By means of simulation we calculate for a representative sample of the Dutch population, per household, the costs and benefits of more flexibility or, for example, of mandatory pension contributions for the self-employed. Using the life cycle theory we determine the benefits of more flexibility and the costs of short-sightedness and wrong choices. In this way we investigate boundaries for flexibility and social protection in our pension system. We will distinguish different groups, such as homeowners and renters, and low and high income households.

Locatie: Tilburg University Seminar Room K834 Warandelan 2 5037 AB Tilburg

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.


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