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Trust in pension funds, or the importance of being financially sound

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  • van Dalen, Hendrik P.
  • Henkens, Kène

Abstract

Is the trust that participants have in their pension fund affected by its funding ratio (i.e., asset/liabilities ratio)? Based on survey, carried out in October 2021, among Dutch pension fund participants we link our survey data to the funding ratio of their pension fund as registered by the pension regulator. First, we show that the level of the funding ratio of their pension fund is positively associated with the trust level of participants. Pension funds with large buffers are associated with a high level of trust. Second, sub-group analyses show that the trust of younger participants is weakly related to the level of the funding ratio and this association is strong and positive for older (55+)/retired participants. It suggests that an interest in or awareness about the financial health of one's pension fund is associated with a higher responsiveness of participants in terms of trust. And third, firm-based pension funds enjoy a higher level of trust compared to sector-based pension funds.

Suggested Citation

  • 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.
    • Handle: RePEc:cup:jpenef:v:22:y:2023:i:4:p:658-669_10
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    1. Rob J. Alessie & Maarten van Rooij & Annamaria Lusardi, 2011. "Financial Literacy, Retirement Preparation and Pension Expectations in the Netherlands," NBER Working Papers 17109, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Yundan Guo & Li Shen, 2023. "Commercial Retirement FOFs in China: Investment and Persistence Performance Analysis," Sustainability, MDPI, vol. 15(18), pages 1-22, September.

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