In 2015, the Dutch government decided to continue the long standing AOW pension system in favor of a defined contributions pension plan. Employees who were dependent on the system to arrange for...Show moreIn 2015, the Dutch government decided to continue the long standing AOW pension system in favor of a defined contributions pension plan. Employees who were dependent on the system to arrange for their retirement found themselves in need to do it on their own. One key requirement to do so successfully is to be financially literate, which the majority of the population is not. With the existence of many mediums to choose from, financial literacy became widespread, but its effects were contested. This paper aims to measure the effect of financial literacy on the saving behavior of Dutch employee. We formulate an equation to compute the saving rate using the difference in yearly wealth and use a standard regression approach. Our study finds that increasing your stock of knowledge in indexation or risk mitigation by 1 unit leads to 40% increase in the saving rate. The results halve and double for males and females, respectively. Moreover, we find significant presence of the Life Cycle Hypothesis in some of our regressions. The only concept from previous formal and home education that remains significant is budgeting training, although its effect is negative.Show less
This study discusses the effect of changes in retirement policy on expected retirement behavior of individual people. Using the panel dataset LISS from 2011 to 2019 in a fixed effect regression...Show moreThis study discusses the effect of changes in retirement policy on expected retirement behavior of individual people. Using the panel dataset LISS from 2011 to 2019 in a fixed effect regression model, we see a highly statistically significant positive effect of a change in statutory retirement age on the expected retirement age. For people between 45 and 61 years old, their expected retirement age increases when the statutory retirement age is increased. Looking for heterogenous effect in different subgroups, the effect remains similar, indicating a robust result. Next to a change in the statutory retirement age, having a partner also influences the expected retirement age. Taking into account these factors, if the government wants to increase her financial sustainability, an increase in the statutory retirement age will lead to a decrease in the old-age dependency ratio, and thus achieving the expected resultShow less
