Risk, redistribution and retirement

The role of pension schemes

J. Bonenkamp

Research output: ThesisDoctoral ThesisScientific

629 Downloads (Pure)

Abstract

One of the main conclusions of this thesis is that collective pension funds are potentially welfare improving, even if contributions are distortionary and even if individuals face positively correlated wage and equity risks. By disconnecting individual contributions and benefits, the pension fund is able to smooth shocks over and beyond the life cycle of single generations. By adapting its investment policy to the risk-bearing capacity of the participants, the fund can in principle ensure that labour-supply distortions are overcompensated by risk-sharing gains. The thesis also contributes to the existing economic literature on portfolio and retirement choice. This literature argues that flexible retirement may serve as a hedge against unforeseen outcomes, justifying more risky asset portfolios during working life. The conclusion that emerges from the thesis is that this positive relation between risk taking and flexible retirement is weakened once uncertainty about labour income is recognized. Apart from facilitating risk sharing, collective pensions can also exploit the benefits of redistribution. Indeed, this thesis shows that introducing a flexible pension take-up can increase welfare if the initial pension scheme contains within-cohort redistribution.
Original languageEnglish
QualificationDoctor of Philosophy
Awarding Institution
  • Tilburg University
Supervisors/Advisors
  • Meijdam, Lex, Promotor
  • van Ewijk, C., Promotor, External person
Award date5 Jun 2013
Place of PublicationTilburg
Publisher
Print ISBNs9789056683542
Publication statusPublished - 2013

Fingerprint

Pension scheme
Retirement
Redistribution
Pension funds
Risk sharing
Pensions
Uncertainty
Hedge
Wages
Cohort
Investment policy
Labor supply
Life cycle
Economics
Assets
Labor income
Equity risk
Risk taking

Cite this

Bonenkamp, J. (2013). Risk, redistribution and retirement: The role of pension schemes. Tilburg: CentER, Center for Economic Research.
Bonenkamp, J.. / Risk, redistribution and retirement : The role of pension schemes. Tilburg : CentER, Center for Economic Research, 2013. 270 p.
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Bonenkamp, J 2013, 'Risk, redistribution and retirement: The role of pension schemes', Doctor of Philosophy, Tilburg University, Tilburg.

Risk, redistribution and retirement : The role of pension schemes. / Bonenkamp, J.

Tilburg : CentER, Center for Economic Research, 2013. 270 p.

Research output: ThesisDoctoral ThesisScientific

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AB - One of the main conclusions of this thesis is that collective pension funds are potentially welfare improving, even if contributions are distortionary and even if individuals face positively correlated wage and equity risks. By disconnecting individual contributions and benefits, the pension fund is able to smooth shocks over and beyond the life cycle of single generations. By adapting its investment policy to the risk-bearing capacity of the participants, the fund can in principle ensure that labour-supply distortions are overcompensated by risk-sharing gains. The thesis also contributes to the existing economic literature on portfolio and retirement choice. This literature argues that flexible retirement may serve as a hedge against unforeseen outcomes, justifying more risky asset portfolios during working life. The conclusion that emerges from the thesis is that this positive relation between risk taking and flexible retirement is weakened once uncertainty about labour income is recognized. Apart from facilitating risk sharing, collective pensions can also exploit the benefits of redistribution. Indeed, this thesis shows that introducing a flexible pension take-up can increase welfare if the initial pension scheme contains within-cohort redistribution.

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Bonenkamp J. Risk, redistribution and retirement: The role of pension schemes. Tilburg: CentER, Center for Economic Research, 2013. 270 p. (CentER Dissertation Series).