Do people really want freedom of choice?: Assessing preferences of pension holders

Harry van Dalen, Kene Henkens

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Reforms of private pension plans across the world are involving the introduction of more options for pension holders to make choices to suit their preferences. Freedom of choice is not, however, a unidimensional concept despite being commonly perceived as such by policy makers. Using a unique panel survey among Dutch employees, we offer a refined typology of preferences with respect to freedom of choice. For most pension contract issues - level of pension savings, investment choice, and risk coverage - a minority (14-26 %) of participants value individual freedom of choice, whereas most would either prefer to let their pension fund make the decisions, or they favour a mixed model whereby they have the option to exercise individual choice but are not obligated to take this option or they are simply indifferent with respect to how their pension contract is designed and financed. Pension holders who distrust their pension fund or who do not express solidarity with other participants are more likely to prefer freedom of choice than those who feel a high level of solidarity and have a high level of trust in their pension fund.
LanguageEnglish
JournalSocial Policy and Administration
DOIs
StateE-pub ahead of print - 8 Feb 2018

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decision making leeway
pension
pension fund
solidarity
private pension
typology
savings
coverage
employee
freedom
minority
reform
Values
contract

Keywords

  • freedom of choice
  • Delegation
  • Agency
  • Pension

Cite this

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title = "Do people really want freedom of choice?: Assessing preferences of pension holders",
abstract = "Reforms of private pension plans across the world are involving the introduction of more options for pension holders to make choices to suit their preferences. Freedom of choice is not, however, a unidimensional concept despite being commonly perceived as such by policy makers. Using a unique panel survey among Dutch employees, we offer a refined typology of preferences with respect to freedom of choice. For most pension contract issues - level of pension savings, investment choice, and risk coverage - a minority (14-26 {\%}) of participants value individual freedom of choice, whereas most would either prefer to let their pension fund make the decisions, or they favour a mixed model whereby they have the option to exercise individual choice but are not obligated to take this option or they are simply indifferent with respect to how their pension contract is designed and financed. Pension holders who distrust their pension fund or who do not express solidarity with other participants are more likely to prefer freedom of choice than those who feel a high level of solidarity and have a high level of trust in their pension fund.",
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Do people really want freedom of choice? Assessing preferences of pension holders. / van Dalen, Harry; Henkens, Kene.

In: Social Policy and Administration, 08.02.2018.

Research output: Contribution to journalArticleScientificpeer-review

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