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Decision making by pension fund trustees in the face of demographic and economic shocks: a vignette study

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  • VAN DALEN, HENDRIK P.
  • HENKENS, KÈNE
  • KOEDIJK, KEES
  • SLAGER, ALFRED

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.

Suggested Citation

  • Van Dalen, Hendrik P. & Henkens, Kène & Koedijk, Kees & Slager, Alfred, 2012. "Decision making by pension fund trustees in the face of demographic and economic shocks: a vignette study," Journal of Pension Economics and Finance, Cambridge University Press, vol. 11(2), pages 183-201, April.
    • Handle: RePEc:cup:jpenef:v:11:y:2012:i:02:p:183-201_00
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    Cited by:

    1. van Dalen, Hendrik P. & Henkens, Kène, 2023. "Trust in pension funds, or the importance of being financially sound," Journal of Pension Economics and Finance, Cambridge University Press, vol. 22(4), pages 658-669, October.
    2. van Dalen, Hendrik Peter & Henkens, Kene, 2018. "Do people really want freedom of choice? : Assessing preferences of pension holders," Other publications TiSEM 448e8a93-9ded-401f-9da0-7, Tilburg University, School of Economics and Management.
    3. Hendrik P. Dalen & Kène Henkens, 2022. "Trust and Distrust in Pension Providers in Times of Decline and Reform: Analysis of Survey Data 2004–2021," De Economist, Springer, vol. 170(4), pages 401-433, November.
    4. van Dalen, Hendrik Peter & Henkens, K., 2022. "Trust and Distrust in Pension Providers in Times of Decline and Reform," Other publications TiSEM 430443a0-b060-42fd-ad9c-2, Tilburg University, School of Economics and Management.
    5. van Dalen, Hendrik Peter & Henkens, K., 2023. "Trust in Pension Funds, Or the Importance of Being Financially Sound," Other publications TiSEM c19152f0-083d-4271-987e-a, Tilburg University, School of Economics and Management.

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