Household savings and shocks to occupational pension funds

Man sitting on money


October 2023


Francesco Caloia of De Nederlandsche Bank, Vrije Universiteit Amsterdam, and Netspar. 

Mauro Mastrogiacomo of De Nederlandsche Bank, Vrije Universiteit Amsterdam, and Netspar. 

Irene Simonetti of the Research Centre for Longevity Risk, University of Amsterdam, and Netspar


This study investigates how shocks to the capital position of pension funds can affect household savings. Using household survey data linked to supervisory data of Dutch occupational pension funds, we provide evidence of the increase in household savings caused by a deterioration of the financial position of pension funds over a period marked by three major financial crises. 

Irene Chart Research Centre for Longevity Risk

The identification strategy exploits cross-sectional and time variations in pension funds’ funding ratios. These variations are exogenous shocks to household pension wealth as they result from asset allocations and price
corrections that are outside the direct control of fund members. In addition, we propose an instrumental variable approach to correct any possible residual endogeneity due to precautionary savings. 

Results show that changes in funding ratios – by affecting the expected pension benefit – translate into opposite changes in household savings, with a displacement effect of about 40%. Households increase savings in the event of a severe pension fund deficit. Our results are driven by younger and more risk-averse individuals and by members of pension funds with a history of low returns on their investment portfolios.


Household savings, occupational pensions, funded pensions, funding ratios

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