Decision making by pension fund trustees in the face of demographic and economic shocks

A vignette study

H.P. van Dalen, C.J.I.M. Henkens, C.G. Koedijk, A.M.H. Slager

Research output: Contribution to journalArticleScientificpeer-review

Abstract


How do pension fund trustees deal with demographic and economic shocks? We examine this issue by using a vignette study among pension fund trustees in the Netherlands. Trustees show asymmetric reactions to shocks in the level of reserves of pension funds. Pension premiums are upwardly flexible but trustees are reluctant to decrease premiums. Asymmetries are also revealed by choices regarding the inflation indexation of benefits and changing real (defined) benefits. Asymmetry is not visible in the policy responses to demographic shocks: increases in life expectancy are reflected by taking structural measures for a defined benefit contract: raising pension premiums and the pension age. Furthermore, trustees allow their choices to be affected by the forces of social comparison: the reserve position of their fund compared to the position of other funds has a significant influence in choosing pension fund policy instruments.
Original languageEnglish
Pages (from-to)183-201
JournalJournal of Pension Economics and Finance
Volume11
Issue number2
DOIs
Publication statusPublished - 2012

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Demographic shocks
Vignettes
Pension funds
Decision making
Economic shocks
Pensions
Premium
Asymmetry
Defined benefit
Life expectancy
Policy responses
Policy instruments
Inflation
Indexation
Social comparison
The Netherlands

Cite this

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title = "Decision making by pension fund trustees in the face of demographic and economic shocks: A vignette study",
abstract = "How do pension fund trustees deal with demographic and economic shocks? We examine this issue by using a vignette study among pension fund trustees in the Netherlands. Trustees show asymmetric reactions to shocks in the level of reserves of pension funds. Pension premiums are upwardly flexible but trustees are reluctant to decrease premiums. Asymmetries are also revealed by choices regarding the inflation indexation of benefits and changing real (defined) benefits. Asymmetry is not visible in the policy responses to demographic shocks: increases in life expectancy are reflected by taking structural measures for a defined benefit contract: raising pension premiums and the pension age. Furthermore, trustees allow their choices to be affected by the forces of social comparison: the reserve position of their fund compared to the position of other funds has a significant influence in choosing pension fund policy instruments.",
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Decision making by pension fund trustees in the face of demographic and economic shocks : A vignette study. / van Dalen, H.P.; Henkens, C.J.I.M.; Koedijk, C.G.; Slager, A.M.H.

In: Journal of Pension Economics and Finance, Vol. 11, No. 2, 2012, p. 183-201.

Research output: Contribution to journalArticleScientificpeer-review

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