Shattered Dreams: The Effects of Changing the Pension System Late in the Game

38 Pages Posted: 2 Mar 2009

See all articles by Andries de Grip

Andries de Grip

Maastricht School of Business and Economics; IZA Institute of Labor Economics

Maarten Lindeboom

Vrije Universiteit Amsterdam; Tinbergen Institute Amsterdam; IZA Institute of Labor Economics

Raymond Michel Montizaan

Maastricht University - Department of Accounting and Information Management

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Abstract

This paper assesses the impact of a dramatic reform of the Dutch pension system on mental health, savings behavior and retirement expectations of workers nearing retirement age. The reform means that public sector workers born on January 1, 1950 or later face a substantial reduction in their pension rights while workers born before this threshold date may still retire under the old, more generous rules. We employ a unique matched survey and administrative data set comprising male public sector workers born in 1949 and 1950 and find strong ex ante effects on mental health for workers who are affected by the reform. This effect increases as birth dates approach the threshold date. Furthermore, the effects differ in accordance with worker characteristics. Finally, we find that the response of those affected by the reform is to work longer and to save more.

Keywords: mental health, retirement, pension reform, causal effect

JEL Classification: I12, J08, J14, J26

Suggested Citation

de Grip, Andries and Lindeboom, Maarten and Montizaan, Raymond Michel, Shattered Dreams: The Effects of Changing the Pension System Late in the Game. IZA Discussion Paper No. 4034, Available at SSRN: https://ssrn.com/abstract=1351197 or http://dx.doi.org/10.2139/ssrn.1351197

Andries De Grip (Contact Author)

Maastricht School of Business and Economics ( email )

P. O. Box 616
Maastricht, NL 6200 MD
Netherlands

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Maarten Lindeboom

Vrije Universiteit Amsterdam ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands
+31 20 444 6033 (Phone)
+31 20 444 6020 (Fax)

Tinbergen Institute Amsterdam

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Raymond Michel Montizaan

Maastricht University - Department of Accounting and Information Management ( email )

Netherlands

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