Choice guidance regarding fixed and variable pensions
In the new flexible premium contracts and in the existing contracts under the Improved Contribution Scheme Act (Wet Verbeterde Premieregeling or WVP), around their retirement date participants can choose between a fixed monthly pension or a variable pension that is expected to be higher but is uncertain also. This project examines the desired guidance in this choice and possible differences between participants in the impact of this guidance.
In this research, opportunities and challenges are mapped out with regard to the guidance of participants in the choice between a fixed or a variable pension. This research starts with gathering knowledge from three sources:
- An inventory among (a number of) the partners of current practice and experiences with it.
- An inventory of the practice in countries where such choices are common.
- A literature study based on the (international) academic literature on this topic.
Based on the collected information, we will draw up an overview of possible strengths, weaknesses and pitfalls that people encounter when supporting the choice for a fixed or variable benefit. Existing methods will be evaluated on of this overview and, where possible, points for improvement will be identified.
In addition to the question of how to provide support, it is also important to know what possible differences between participants there are in the effects of support. Which characteristics of the participant (e.g., income and education) cause the effect of support to be greater or smaller? To this end, an empirical part will be added to this study in which a stratified sample of the Dutch population will be questioned about their preferences for fixed and flexible pensions. In the sample, a distinction will be made specifically between younger and older participants who will be offered the same (hypothetical) choices in a controlled experiment. Based on the literature review, two choice support instruments will be offered to some of the participants in order to be able to evaluate the effect of this support and how this effect differs between participants based on distance to retirement date/age and a number of other socio-demographic characteristics.