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Do retirement savings increase in response to information about retirement and expected pensions?

Author

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  • Dolls, Mathias
  • Doerrenberg, Philipp
  • Peichl, Andreas
  • Stichnoth, Holger

Abstract

How can retirement savings be increased? We explore a unique policy change in the context of the German pension system to study this question. As of 2005 (with a phase-in period between 2002 and 2004), the German pension administration started to send out annual letters providing detailed and comprehensible information about the pension system and individual expected public pension payments. This reform did not change the level of pensions, but only provided information to individuals about their expected pension payments. Using German tax return data, we exploit an age discontinuity to identify the effect of these letters on the behavior of individuals. We find an increase in tax-deductible private retirement savings and provide evidence that this is not due to a crowding-out of other forms of savings. We also show that labor earnings, i.e. the most direct way to increase public pensions, increase after receiving the letter.

Suggested Citation

  • Dolls, Mathias & Doerrenberg, Philipp & Peichl, Andreas & Stichnoth, Holger, 2018. "Do retirement savings increase in response to information about retirement and expected pensions?," Journal of Public Economics, Elsevier, vol. 158(C), pages 168-179.
  • Handle: RePEc:eee:pubeco:v:158:y:2018:i:c:p:168-179
    DOI: 10.1016/j.jpubeco.2017.12.014
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    More about this item

    Keywords

    Pensions; Savings; Information letters; Earnings;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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