What Triggers Early Retirement? Results from Swiss Pension Funds

36 Pages Posted: 17 Jun 2004

See all articles by Monika Butler

Monika Butler

University of St. Gallen; CESifo (Center for Economic Studies and Ifo Institute)

Olivia Huguenin

Université de Lausanne - DEEP-HEC

Federica Teppa

Center for Research on Pensions and Welfare Policies (CeRP) - Department of Economics and Finance

Date Written: May 2004

Abstract

Early retirement is predominantly considered as the result of incentives set by social security and the tax system. But people seem to retire early even in the absence of such distortions, as the Swiss example demonstrates. We look for determinants of early retirement, in particular the role of lifetime income and family status, using individual data from a selection of Swiss pension funds. Our findings suggest that affordability is a key determinant in retirement decisions: more affluent men and - to a much smaller extent - women tend to leave the work force earlier. The fact that early retirement has become much more prevalent in the last 15 years is another indicator for the importance of affordability as Switzerland's funded pension system has matured over that period leading to higher effective replacement rates. We also find sizeable differences in retirement behaviour across marital status. These may be explained by a constrained rational choice based on differential mortality and the desire of couples to coordinate their entry into retirement.

Keywords: Occupational pension, retirement decision, duration models

JEL Classification: D91, H55

Suggested Citation

Bütler, Monika and Huguenin, Olivia and Teppa, Federica, What Triggers Early Retirement? Results from Swiss Pension Funds (May 2004). Available at SSRN: https://ssrn.com/abstract=556727

Monika Bütler (Contact Author)

University of St. Gallen ( email )

Varnbuelstr. 14
Saint Gallen, St. Gallen CH-9000
Switzerland

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Olivia Huguenin

Université de Lausanne - DEEP-HEC ( email )

BFSH1
CH-1015 Lausanne
Switzerland

Federica Teppa

Center for Research on Pensions and Welfare Policies (CeRP) - Department of Economics and Finance ( email )

Via Real Collegio, 30
Moncalieri, Torino 10024
Italy
+39 11 6476 518 (Phone)
+39 11 6403 680 (Fax)

HOME PAGE: http://cerp.unito.it/Persone/ricercatori/cv_federica_teppa.htm

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