Retirement Drawdown Defaults: The Role of Implied Endorsement

71 Pages Posted: 19 Apr 2018 Last revised: 24 Aug 2018

See all articles by Jennifer Alonso-García

Jennifer Alonso-García

Department of Economics, Econometrics and Finance; Université Libre de Bruxelles (ULB) - Department of Mathematics; ARC Centre of Excellence in Population Ageing Research

Hazel Bateman

UNSW Sydney, CEPAR

Johan Bonekamp

Tilburg University - Department of Econometrics & Operations Research

Ralph Stevens

CPB Netherlands Bureau of Economic Policy Analysis; CEPAR

Date Written: August 17, 2018

Abstract

We explore whether implied endorsement is an explanation for the stickiness of retirement wealth drawdown defaults. Using an experimental survey fielded in the Netherlands and Australia, we analyze the extent to which individuals stick to default drawdowns and whether they perceive these as implicit advice from government or recommendations from peers. We find that vulnerable groups - with low financial resources and pension capability - are more likely to find implied endorsement important. As expected, the peer effect is reduced for those with less opportunity to participate in a social network but is enhanced for those who are risk averse.

Keywords: decumulation policy, defaults, peer effects

JEL Classification: D14, D90, J14, J26

Suggested Citation

Alonso-García, Jennifer and Bateman, Hazel and Bonekamp, Johannes and Stevens, Ralph, Retirement Drawdown Defaults: The Role of Implied Endorsement (August 17, 2018). Available at SSRN: https://ssrn.com/abstract=3154907 or http://dx.doi.org/10.2139/ssrn.3154907

Jennifer Alonso-García (Contact Author)

Department of Economics, Econometrics and Finance ( email )

Postbus 72
9700 AB Groningen
Netherlands

Université Libre de Bruxelles (ULB) - Department of Mathematics ( email )

Brussels
Belgium

ARC Centre of Excellence in Population Ageing Research ( email )

Level 6, Central Lobby (enter via East Lobby)
Australian School of Business Building
Sydney, New South Wales NSW 2052
Australia

Hazel Bateman

UNSW Sydney, CEPAR ( email )

High Street
Sydney, NSW 2052
Australia

Johannes Bonekamp

Tilburg University - Department of Econometrics & Operations Research ( email )

Tilburg, 5000 LE
Netherlands

Ralph Stevens

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

HOME PAGE: http://https://www.cpb.nl/medewerkers/ralph-stevens

CEPAR ( email )

Sydney, NSW 2052
Australia
+61 2 9385 1883 (Fax)

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