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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
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

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.

Type
Articles
Copyright
Copyright © Cambridge University Press 2013

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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.

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