bfn workplace pension_savings_jun15
TRANSCRIPT
Does the provision of workplace pensions affectother forms of individual savings?
Evidence from the United Kingdom
Bernardo Fonseca Nunesa
a Behavioural Science Centre, University of Stirling
Stirling PhD Conference in Behavioural Science, 25th of July 2015
1 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
1 Introduction
2 MethodDataEmpirical strategy
3 Results
4 Conclusions
2 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
Outline
1 Introduction
2 MethodDataEmpirical strategy
3 Results
4 Conclusions
3 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
Outline
Estimate the effect of workplace pension provision on:1 Private pension plan membership;2 Individual savings from current income;3 Save or not? How much per month?
4 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
Workplace-provided pension schemesObjectives
Estimate the effect of workplace pension provision on:1 Private pension plan membership;2 Individual savings from current income;3 Save or not? How much per month?
4 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
Workplace-provided pension schemesObjectives
Estimate the effect of workplace pension provision on:1 Private pension plan membership;2 Individual savings from current income;3 Save or not? How much per month?
4 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
Workplace-provided pension schemesObjectives
3 pillars: each one requires different degrees of ability toprocess information and make informed decisions:
5 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
Saving for retirement
1 Introduction
2 MethodDataEmpirical strategy
3 Results
4 Conclusions
6 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
Outline
We use data of employed workers:N=74,383 (i=11,867);Job characteristics;Household and individual financial conditions;Socio-demographic characteristics.
7 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
British Household Panel SurveyWaves 2-18, years 1992-2009
We use data of employed workers:N=74,383 (i=11,867);Job characteristics;Household and individual financial conditions;Socio-demographic characteristics.
7 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
British Household Panel SurveyWaves 2-18, years 1992-2009
We use data of employed workers:N=74,383 (i=11,867);Job characteristics;Household and individual financial conditions;Socio-demographic characteristics.
7 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
British Household Panel SurveyWaves 2-18, years 1992-2009
We use data of employed workers:N=74,383 (i=11,867);Job characteristics;Household and individual financial conditions;Socio-demographic characteristics.
7 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
British Household Panel SurveyWaves 2-18, years 1992-2009
1stStage
Pr[pit = 1] = φ1Nit + β1Xit + µ1i + ω1t + ε1it
2ndStage
Pr[yit = 1] = δ2p̂it + β2Xit + µ2i + ω2t + ε2it
pit = an indicator variable denoting whether the employer runsa pension scheme, Nit = is a vector of categorical variablesindicating # workers at job place (scale 1-9), Xit = a vector ofsocio-demographics, job characteristics and financialconditions, yit = is the outcome of interest, δ2 = is theparameter of interest.
8 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
Empirical strategy: IVTwo-Stage Least Squares - 2SLS
Pr[pit = 1] = φ1Nit + β1Xit + µ1i + ω1t + ε1it
9 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
Empirical strategyFirst stage: pension provision
1 Introduction
2 MethodDataEmpirical strategy
3 Results
4 Conclusions
10 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
Outline
Pr[yit = 1] = δ2p̂it + β2Xit + µ2i + ω2t + ε2it
11 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
ResultsEffect of workplace plan provision
Exact match on wave and company size;Within a caliper distance = 0.001;
Pr[pit = 1] = Φ(φ1Nit + β1Xit + α1)
12 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
ResultsRobustness check with propensity scores
Pension provision on support = 11,228;No provision on support = 22,800;
13 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
ResultsMatching on propensity scores
14 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
ResultsExact matching on wave (2-18)
15 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
ResultsExact matching on workers (scale 1-9)
16 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
ResultsBalancing condition
yit = δ2p̂it + β2Xit + µ2i + ω2t + ε2it
17 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
ResultsWhat happens with monthly savings?
1 Introduction
2 MethodDataEmpirical strategy
3 Results
4 Conclusions
18 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
Outline
1 Evidence of a negative effect (substitution) of workplacepension provision on private plan membership;
2 No evidence of a decrease in other forms of savings fromcurrent income, for example, saving in a bank. These areused for short-term purposes.
3 Policy application: pension reforms based on universalprovision of workplace plans.
19 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
Conclusions
1 Evidence of a negative effect (substitution) of workplacepension provision on private plan membership;
2 No evidence of a decrease in other forms of savings fromcurrent income, for example, saving in a bank. These areused for short-term purposes.
3 Policy application: pension reforms based on universalprovision of workplace plans.
19 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
Conclusions
1 Evidence of a negative effect (substitution) of workplacepension provision on private plan membership;
2 No evidence of a decrease in other forms of savings fromcurrent income, for example, saving in a bank. These areused for short-term purposes.
3 Policy application: pension reforms based on universalprovision of workplace plans.
19 / 19Does the provision of workplace pensions affect other forms of individual savings?
Introduction Method Results Conclusions
Conclusions
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20 / 19Does the provision of workplace pensions affect other forms of individual savings?
Bernardo Fonseca Nunes
Behavioural Science CentreTwitter: @_bernardofnUniversity of StirlingScotland
Email: [email protected]
www.stir.ac.uk