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What Triggers Early Retirement. Results from Swiss Pension Funds

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Author Info

  • Monika Bütler

    ()
    (deep–HEC, Université de Lausanne, CEPR, CESIfo)

  • Olivia Huguenin

    (deep–HEC, Université de Lausanne)

  • Federica Teppa

    ()
    (Center for Research on Pensions and Welfare Policies)

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 ?ndings suggest that affordability is a key determinant in retirement decisions: More affuent 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 ?nd sizeable differences in retirement behavior 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.

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Bibliographic Info

Paper provided by Center for Research on Pensions and Welfare Policies, Turin (Italy) in its series CeRP Working Papers with number 35.

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Length: 36 pages
Date of creation: Apr 2004
Date of revision:
Handle: RePEc:crp:wpaper:35

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Keywords: Occupational Pension; Retirement decision; Duration models;

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References

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Citations

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Cited by:
  1. Monika Riedel & Helmut Hofer, 2013. "Determinants of the Transition from Work into Retirement," NRN working papers, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria 2013-10, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  2. Monika Bütler, 2010. "The Role of the Annuity’s Value on the Decision (Not) to Annuitize: Evidence from a Large Policy Change," University of St. Gallen Department of Economics working paper series 2010, Department of Economics, University of St. Gallen 2010-05, Department of Economics, University of St. Gallen.
  3. Piekkola, Hannu & Deschryvere, Matthias, 2004. "Retirement Decisions and Option Values: Their Application Regarding Finland," Discussion Papers, The Research Institute of the Finnish Economy 951, The Research Institute of the Finnish Economy.
  4. Christian Keuschnigg & Mirela Keuschnigg & Christian Jaag, 2011. "Aging and the Financing of Social Security in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), Swiss Society of Economics and Statistics (SSES), vol. 147(II), pages 181-231, June.
  5. Marjan, MAES, 2008. "Financial and redistributive impact of reforming the old-age pension system in Belgium," Discussion Papers (ECON - Département des Sciences Economiques), Université catholique de Louvain, Département des Sciences Economiques 2008040, Université catholique de Louvain, Département des Sciences Economiques.
  6. Justina A.V. Fischer & Alfonso Sousa-Poza, 2006. "The Institutional Determinants of Early Retirement in Europe," University of St. Gallen Department of Economics working paper series 2006, Department of Economics, University of St. Gallen 2006-08, Department of Economics, University of St. Gallen.
  7. Daniel Hallberg & Matias Eklöf, 2010. "Do buy-outs of older workers matter?: Estimating retirement behavior with special early retirement offers," International Journal of Manpower, Emerald Group Publishing, Emerald Group Publishing, vol. 31(3), pages 337-359, July.
  8. Estelle James & Alejandra Cox Edwards, 2005. "Do Individual Accounts Postpone Retirement: Evidence from Chile," Working Papers, University of Michigan, Michigan Retirement Research Center wp098, University of Michigan, Michigan Retirement Research Center.
  9. Dorn, David & Sousa-Poza, Alfonso, 2007. "'Voluntary' and 'Involuntary' Early Retirement: An International Analysis," IZA Discussion Papers 2714, Institute for the Study of Labor (IZA).

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