Hostname: page-component-797576ffbb-xg4rj Total loading time: 0 Render date: 2023-12-03T18:02:33.534Z Has data issue: false Feature Flags: { "corePageComponentGetUserInfoFromSharedSession": true, "coreDisableEcommerce": false, "useRatesEcommerce": true } hasContentIssue false
  • English
  • Français

Expected and actual replacement rates in the pension system of the Netherlands: how and why do they differ?*

Published online by Cambridge University Press:  19 February 2013

MARK VAN DUIJN ,
MAURO MASTROGIACOMO ,
MAARTEN LINDEBOOM  and
PETTER LUNDBORG
MARK VAN DUIJN
Affiliation:
Department of Spatial Economics, VU University, De Boelelaan 1105, 1081 HV Amsterdam, The Netherlands Tinbergen Institute, Gustav Mahlerplein 117, 1082 MS Amsterdam, The Netherlands (e-mail: m.van.duijn@vu.nl)
MAURO MASTROGIACOMO
Affiliation:
Financial Stability division De Nederlandsche Bank, Department of Economics, VU University, Amsterdam and Netspar
MAARTEN LINDEBOOM
Affiliation:
Department of Economics, VU University, Amsterdam, HEB, IZA and Netspar
PETTER LUNDBORG
Affiliation:
Department of Economics, Lund University Centre for Economic Demography, Lund University, IZA
Get access Rights & Permissions [Opens in a new window]

Abstract

This study examines the expected retirement replacement rates (RRs) of several cohorts of Dutch employees at the time of their planned retirements. It also computes RRs based on the available pension records. We find that the expected replacement rate (E(RR)) is, in general, higher than the ones we compute. Larger discrepancies are found for younger cohorts and for individuals with less education and working experience. We also examine the difference between the expected and computed RRs and find that the mismatch is mostly related to poor institutional knowledge. We also show the role of assumptions about institutions and wage profiles in determining our results.

Keywords

J2D84D83Replacement rateexpected retirementOaxaca decomposition
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 12 , Issue 2 , April 2013 , pp. 168 - 189
Copyright
Copyright © Cambridge University Press 2013

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

We would like to thank Courtney Coile and three anonymous referees for their insightful comments. We thank DNB for providing us with excellent data. Mark van Duijn gratefully acknowledges CPB and VU University for their (financial) support.

References

Alessie, R. J. and Ree, J. (2009) Explaining the hump in life cycle consumption profiles. De Economist, Springer, 157(1): 107–120.Google Scholar
Alessie, R. J., van Rooij, M. and Lusardi, A. (2011) Financial literacy, retirement preparation and pension expectations in the Netherlands. NBER Working Papers 17109.Google Scholar
Arnold, I. J. M. and Lemmen, J. J. G. (2006) Inflation expectations and inflation uncertainty in the eurozone: evidence from survey data. CESifo Working Paper Series 1667, CESifo Group Munich.Google Scholar
Banks, J., Blundell, R. and Tanner, S. (1998) Is there a retirement-savings puzzle? American Economic Review, 88: 769–788.Google Scholar
Bosch, N. and van der Klaauw, B. (2012) Analyzing female labor supply – evidence from a Dutch tax reform. Labour Economics, 19: 271–280.Google Scholar
Bernheim, B. D., Skinner, J. and Steven, W. (2001) What accounts for the variation in retirement wealth among U.S. households? American Economic Review, 91: 832–857.Google Scholar
Borghans, L., Duckworth, A., Heckman, J. J. and ter Weel, B. (2008) The economics and psychology of personality traits. NBER Working Paper W13810.Google Scholar
Bottazzi, R., Jappelli, T. and Padula, M. (2006) Retirement expectations, pension reforms, and their impact on private wealth accumulation. Journal of Public Economics, 90(12): 2187–2212.Google Scholar
Burkhauser, R. V., Butler, J. S. and Gumus, G. (2004) Dynamic programming model estimates of social security disability insurance application timing. Journal of Applied Econometrics, 19: 671–685.Google Scholar
Christensen, M. (2008) Demand patterns around retirement: Evidence from Spanish panel data. The School of Economics Discussion Paper Series 0809, The University of Manchester.Google Scholar
Euwals, R., van Vuuren, D. and Wolthoff, R. (2005) Early retirement behavior in the Netherlands: evidence from a policy reform. Discussion Paper 52, CPB, The Hague.Google Scholar
Gustman, A. L. and Steinmeier, T. L. (2001) Imperfect knowledge retirement and savings. NBER Working Paper 8046.Google Scholar
Hamermesh, D. S. (1984) Consumption during retirement: the missing link in the life cycle. Review of Economics and Statistics, 66(1): 1–7.Google Scholar
Hurd, M. D. and Rohwedder, S. (2003) The retirement consumption puzzle: anticipated and actual declines in spending at retirement. NBER Working Paper 9586.Google Scholar
Hurst, E. (2008) The retirement of a consumption puzzle. Erik Hurst. NBER Working Paper No. 13789. February 2008.Google Scholar
Kerkhofs, M., Lindeboom, M. and Theeuwes, J. (1999) Retirement, financial incentives and health. Labor Economics, 6: 203–227.Google Scholar
Manski, C. F. (2004) Measuring expectations. Econometrica, 72, 1329–1376.Google Scholar
Mastrogiacomo, M. and Alessie, R. J. M. (2011) Did you really Save so little for your retirement? An analysis of retirement savings and unconventional retirement accounts. Netspar Discussion Paper No. 12/2011-094.Google Scholar
OECD Economic Outlook No. 84 – Netherlands, OECD, November 2008, Paris.Google Scholar
Samwick, A. (1998) New evidence on pensions, social security, and the timing of retirement. Journal of Public Economics, 70: 207–236.Google Scholar
Van Els, P. J. A., Van den End, W. A. and Van Rooij, M. C. J. (2004) Pensions and public opinion: a survey among Dutch households. De Economist, 152: 101–116.Google Scholar
Van Ewijk, C. (2005) Reform of occupational pensions in The Netherlands. De Economist, 153: 331–347.Google Scholar
Van Santen, P., Alessie, R. J. M. and Kalwij, A. (2011) Probabilistic survey questions and incorrect answers: retirement income replacement rates. Netspar Discussion Paper, No. 02/2011-011.Google Scholar
Ventura, L. and Eisenhauer, J. G. (2006) Prudence and precautionary saving. Journal of Economics and Finance, 30: 155–168.Google Scholar