Financial impact of life events on pensions

The new Dutch pension system requires pension providers to determine an appropriate investment risk profile for different groups of participants, depending on their ability to bear risk (risk capacity) and their risk preferences (risk tolerance). The design of the new pension system thus directly impacts participants’ risk and pensions. However, participants currently have little understanding of the magnitude of major life events.

A Netspar CLICKNL Impulse Grant has made it possible to develop a first version of the Pension Comparison Tool. This tool gives people insight into how much pension and other assets they have accumulated and how they are doing compared to others. It can show whether someone is on the right track because is uses a special set of data: detailed CBS microdata with which people can compare themselves to reference groups, including sector, income position, gender. The pension comparison tool thus allows people to look over their neighbors’ shoulders, so to speak.

The goal of this topicality research is to accurately determine the financial impact of a life event (e.g., divorce, losing a job, disability). The results will be made available in the pension comparison tool with which we are developing a data infrastructure that can be used by pension practitioners and scientists for mapping risk capacity and calculating (pension) policies.