Worldwide Diversity in Funded Pension Plans: Four Role Models on Choice and Participation

Huitron, Manuel Garcia; Ponds, Eduard

doi:10.2139/ssrn.2606616

Cited by 7 publications

(5 citation statements)

References 61 publications

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“…Second, DC plans already have more than half of retirement wealth 3. For an extensive set of international pension comparisons, see Garcia-Huitron and Ponds (2015).…”

Section: Analytic Frameworkmentioning

confidence: 99%

Liquidity in Retirement Savings Systems: An International Comparison

et al. 2015

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What is the socially optimal level of liquidity in a retirement savings system? Liquid retirement savings are desirable because liquidity enables agents to flexibly respond to preretirement events that raise the marginal utility of consumption, like income shocks. 1 On the other hand, preretirement liquidity is undesirable when it leads to undersaving arising from, for example, planning mistakes or self-control problems. 2

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“…Second, DC plans already have more than half of retirement wealth 3. For an extensive set of international pension comparisons, see Garcia-Huitron and Ponds (2015).…”

Section: Analytic Frameworkmentioning

confidence: 99%

Liquidity in Retirement Savings Systems: An International Comparison

et al. 2015

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“…Exchange rate €1 = $1.10 (December 2015).5 The Netherlands is the only country in the world with mandatory full annuitization of second pillar retirement savings, cf. Garciá-Huitrón andPonds (2015).…”

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confidence: 99%

Framing and the annuitization decision – Experimental evidence from a Dutch pension fund

Bockweg

Ponds²,

Steenbeek

et al. 2017

Journal of Pension Economics and Finance

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We report the effects of framing and default settings in annuity demand after conducting a survey-based experiment with over 3,000 members of a Dutch occupational pension plan. The participants were asked to allocate their real projected pension accrual between a life annuity and a partial lump sum. In particular, we investigated the joint effects of consumption and investment frames and gain and loss frames. We present strong evidence for framing and default setting effects in annuity demand. We also find robust evidence of individual characteristics of influence annuity demand, highlighting the importance of heterogeneity among participants. Framing and default effects remain significant when we control for individual characteristics. We conclude Dutch plan members generally welcome the partial lump sum option over full annuitization. Framing and default settings are generally capable of predictively steering annuity demand. The precise effect framing may have also depends on the institutional environment, which predefines the perspective through which individuals filter annuities.

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“…Despite these limitations, the method and results presented in this contribution may offer food for thought for policymakers who are either contemplating the introduction of more freedom of choice or who are trying to restrict the use of freedom. Pension funds across the world diverge with regards to the extent and type of choice they offer (Garcia‐Huitron & Ponds, ; Whiteford & Whitehouse, ). Both sides of the spectrum—those systems allowing complete freedom of choice such as the United States and New Zealand and those systems where choice is (virtually) absent such as the Netherlands—experience difficulties in reforming their systems to make individual choice work.…”

Section: Conclusion and Discussionmentioning

confidence: 99%

Do people really want freedom of choice? Assessing preferences of pension holders

Dalen

Henkens

2018

Soc Policy Adm

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Reforms of private pension plans across the world are involving the introduction of more options for pension holders to make choices to suit their preferences. Freedom of choice is not, however, a unidimensional concept despite being commonly perceived as such by policymakers. Using a unique panel survey among Dutch employees, we offer a refined typology of preferences with respect to freedom of choice. For most pension contract issues-level of pension savings, investment choice, and risk coverage-a minority (14-26%) of participants value individual freedom of choice, whereas most would either prefer to let their pension fund make the decisions, or they favor a mixed model whereby they have the option to exercise individual choice but are not obligated to take this option, or they are simply indifferent with respect to how their pension contract is designed and financed. Pension holders who distrust their pension fund or who do not express solidarity with other participants are more likely to prefer freedom of choice than those who feel a high level of solidarity and have a high level of trust in their pension fund.

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Worldwide Diversity in Funded Pension Plans: Four Role Models on Choice and Participation

Cited by 7 publications

References 61 publications

Liquidity in Retirement Savings Systems: An International Comparison

Liquidity in Retirement Savings Systems: An International Comparison

Framing and the annuitization decision – Experimental evidence from a Dutch pension fund

Do people really want freedom of choice? Assessing preferences of pension holders

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