The effects of freedom of choice regarding pension payouts

Pensions in the Netherlands feature little flexibility. The pension scheme pays out pensions in the form of annuities and options to deviate from the standard flat profile are limited. Quite a number of participants would welcome somewhat more flexibility, however, a number of surveys have suggested. Given this result, this paper asks whether it would be possible to raise welfare of society by allowing for somewhat more flexibility. We focus more on the two effects that may be pivotal at the individual level: a better match with heterogeneous preferences and a greater risk for failures in life-cycle planning.  We calculate both types of welfare effects for a number of people that are liquidity-constrained and that differ in terms of preferred consumption profiles and risk of financial planning failures.

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.


Mission en strategy           •           Network           •           Organisation           •          Magazine
Board Brief            •            Actionplan 2023-2027           •           Researchagenda


Our partners

B20160708_university of groningen
B20211201_Cardano_Logo 2021_website
AFM logo 2023 zwart wit
View all partners