Why Forcing People to Save for Retirement May Backfire

45 Pages Posted: 26 Apr 2005

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: April 2005

Abstract

If individuals are unable or unwilling to borrow, a higher than desired second pillar pension capital may induce people to retire earlier than they would have in the absence of such a scheme. Individuals thus leave the workforce as soon as the retirement income is deemed sufficient and the pension plan avails withdrawal of benefits. We provide evidence using individual data from a selection of Swiss pension funds, allowing us to perfectly control for pension scheme details. Our findings suggest that affordability is a key determinant in the retirement decisions. The higher the accumulated pension capital, the earlier individuals tend to leave the workforce.

Keywords: occupational pension, retirement decision, duration models

JEL Classification: D91, H31, J26

Suggested Citation

Bütler, Monika and Huguenin, Olivia and Teppa, Federica, Why Forcing People to Save for Retirement May Backfire (April 2005). Available at SSRN: https://ssrn.com/abstract=710945

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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