“The average pension fund participant clearly opts for the path of gradual transition. And with some understanding of human nature, this is easy to comprehend.”
What is the focus of the paper?
This paper examines how pension fund participants would vote in a referendum on the choice between consolidating their pensions (merging old and new pension rights under the new rules) or gradually transitioning their pensions (separating old and new rights, based on their respective rules). An online survey was conducted to investigate how these choices are influenced by different response options.
What are the key findings?
In all tested referendum versions, pension participants show a preference for the gradual transition of their pension rights. However, many participants have little confidence in their own judgment regarding the upcoming pension transition. They find the pension system too complex to form an informed opinion. Consequently, they do not consider a referendum to be useful. Approximately half of the participants support decision-making by experts, while only 17 percent oppose to that.
What are the implications?
A large-scale reform, such as the transition to a new pension system, requires long-term trust from participants and stakeholders. Without this trust, the feasibility of the reform is at risk. Conducting a pension referendum on the big-bang transition will create barriers to the pension reform underway.