How Sensitive are Individual Retirement Expectations to Raising the Retirement Age?

41 Pages Posted: 23 Mar 2013

See all articles by Andries de Grip

Andries de Grip

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

Didier Fouarge

Maastricht University

Raymond Michel Montizaan

Maastricht University - Department of Accounting and Information Management

Abstract

This paper investigates the causal effects of the announcement of an increase in the statutory pension age on employee retirement expectations. In June 2010, the Dutch government signed a new pension agreement with the employer and employee organizations that entailed an increase in the statutory pension age from 65 currently to 66 in 2020 for all inhabitants born after 1954. Given the expected increase in average life expectancy, it was also decided that in 2025 the pension age would be further increased to 67 for those born after 1959. This new pension agreement received huge media coverage. Using representative matched administrative and survey data of public sector employees, we find that the proposed policy reform increased the expected retirement age by 3.6 months for employees born between 1954 and 1959 and by 10.8 months for those born after 1959. This increase is reflected in a clear shift in the retirement peak from age 65 to ages 66 and 67 for the respective treated cohorts. Men respond less strongly to the policy reform than women, but within couples we find no evidence that the retirement expectations of one spouse are affected by an increase in the statutory pension age of the other. Furthermore, we show that treatment effects are largely driven by highly educated individuals but are lower for employees whose job involves physically demanding tasks or managerial and supervisory tasks.

Keywords: retirement, labor supply, pension system reform, cross-spouse effects

JEL Classification: J14, J26

Suggested Citation

de Grip, Andries and Fouarge, Didier and Montizaan, Raymond Michel, How Sensitive are Individual Retirement Expectations to Raising the Retirement Age?. IZA Discussion Paper No. 7269, Available at SSRN: https://ssrn.com/abstract=2238302

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

Didier Fouarge

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

Raymond Michel Montizaan

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

Netherlands

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