Time inconsistency and delayed retirement decision: the French pension bonus

Abstract

With the increase in life expectancy and demographic shocks, several public policies in the last decades aim to encourage individuals to postpone retirement. One of them, the pension bonus, gives an increased pension if individuals retire beyond their Full Retirement Age. Previous ex post analyses found that the responsiveness to this type of financial incentives, which encourage to postpone retirement, is heterogeneous among agents and that the global effect is rather limited. Deriving from previous research in Behavioural Economics, this article analyses the impact of time inconsistency in the decision to delay retirement to get the bonus. Using public national survey data, short-term and long-term impatience are measured with questions on retiring motivations. After controlling for the endogeneity of the bonus knowledge, econometric results show that time-inconsistent agents are less likely to retire with the bonus.

Policy interplay among social health insurance system, pension system, delayed retirement initiative and implications for the self‐rated health status of older workers

“…And from 2024 to 2046, the retirement age for both men and women will be further raised to 68 by 2020, while in France late retirement was encouraged through bonuses. 2 Compared with developed countries, China faces the severer ageing problem due to the long-term one-child policy which has led to a higher proportion of elderly born as baby boomers. It is expected that by 2040, China's older population will reach 324 million, accounting for 22.6% of the total population, and the level of population ageing will be significantly higher than that of developed countries after 2050.…”

“…In the UK, the basic state pension age for women would gradually rise from 60 to 65 between 2010 and 2020, the same as for men. And from 2024 to 2046, the retirement age for both men and women will be further raised to 68 by 2020, while in France late retirement was encouraged through bonuses 2 . Compared with developed countries, China faces the severer ageing problem due to the long‐term one‐child policy which has led to a higher proportion of elderly born as baby boomers.…”