Increasing the labor force participation among older workers in the Netherlands: e ects of the pension incentives, increasing retirement age, and partial retirement

Higher labor force participation is an important policy objective in many western countries, especially in the light of ageing and the sustainability of government finances. In addition to classic policies such as raising the statutory retirement age, flexible combinations of work with first- and second-pillar pension schemes may stimulate participation among older workers. We analyse stated preference data to investigate how pension incentives, the increasing retirement age, and provision of a partial retirement scheme affects the individual retirement decisions, in particular the decision of working beyond the effective or statutory retirement ages in the Netherlands. Two in five prefer partial retirement over early or delayed full retirement. Individuals more often want to use partial retirement to work longer if the deferred pension income is higher than it would be on an actuarially fair basis. Increasing the retirement age beyond age 65 induces individuals to work part-time instead of full-time. Provision of a partial retirement plan at a retirement age of 63 increases total labor supply by a net amount of 0.9 months. If the wage rate is lower in partial retirement, individuals prefer full retirement. We validate that these stated preferences are representative of both expected and the revealed retirement ages, and type of retirement (partial and full retirement).

Netspar, Network for Studies on Pensions, Aging and Retirement, is een denktank en kennisnetwerk. Netspar is gericht op een goed geïnformeerd pensioendebat.


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