Hostname: page-component-78c5997874-dh8gc Total loading time: 0 Render date: 2024-11-05T08:52:01.387Z Has data issue: false hasContentIssue false
  • English
  • Français

Choosing between subsidized or unsubsidized private pension schemes: evidence from German panel data*

Published online by Cambridge University Press:  21 August 2012

CHRISTIAN PFARR  and
UDO SCHNEIDER
CHRISTIAN PFARR
Affiliation:
Department of Law and Economics, Institute of Public Finance, University of Bayreuth, D-95447 Bayreuth (e-mail: [email protected])
UDO SCHNEIDER
Affiliation:
Department of Law and Economics, Institute of Public Finance, University of Bayreuth and WINEG – Scientific Institute of TK for Benefit and Efficiency in Health Care, D-22305 Hamburg (e-mail: [email protected])
Get access Rights & Permissions [Opens in a new window]

Abstract

Since 2002, the German government has been attempting to increase private old-age provisions by introducing incentives such as supplementary subsidies and tax credits. Since then, the so-called ‘Riester pension’ has grown in popularity. Apart from subsidized pension plans, unsubsidized private pension insurances have – already in the past – been a very important instrument among old-age provision schemes. With data of the German SAVE study for the years 2005–2009, we analyze whether the decision for a ‘Riester pension’ is independent of the decision for unsubsidized private pension insurance using methods for simultaneous equations. Our estimates indicate that decisions on ‘Riester’ and private pensions are not independent and the proposed random parameters bivariate probit model results in efficiency gains compared to separate probit estimations. Regarding governmental subsidies, we find positive incentive effects of child subsidies, whereas low income earners are not seen to increase their old-age provisions. Further, there is strong evidence for a ‘crowding-in’ among alternative assets, i.e., that individuals holding various assets make additional investments in ‘Riester pensions’ or private pension insurances. Finally, when subsidies are given, these subsidies are a clearly stronger saving motive than the aim to make provisions for old age, a result confirmed by the additional fixed-effects estimations.

Keywords

D12H31I38subsidized pensionsaving incentivesbivariate probit panel
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 12 , Issue 1 , January 2013 , pp. 62 - 91
Copyright
Copyright © Cambridge University Press 2012

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

The authors thank two anonymous referees for their very helpful remarks and suggestions. The authors acknowledge useful comments from Matthias Kollenda, Andreas Schmid and the participants of the ‘1st Workshop on Labor Market and Social Policy’ (2011) of the Ifo Institute for Economic Research in Dresden. We also appreciate the discussion at the 9th International Workshop on Pension, Insurance and Savings at Dauphine Université in Paris in 2011 and at the 2nd International Workshop on the Socio-Economics of Ageing at ISEG in Lisbon in 2011.

References

Antón, J.-I., de Muoz Bustillo, R. and Fernández-Macias, E. (2011) Supplementary private pensions and saving: Evidence from Spain. Presented at the 9th International Workshop on Pension, Insurance and Saving in Paris 2011, University of Salamanca, Salamanca.Google Scholar
Attanasio, O.P., Banks, J. and Wakefield, M. (2004) Effectiveness of tax incentives to boost (retirement) saving: theoretical motivation and empirical evidence. OECD Economic Studies, 2004(39): 145–164.Google Scholar
Baltagi, B.H. (2008) Econometric Analysis of Panel Data, 4th ed.Chichester: Wiley.Google Scholar
BMAS – Federal Ministry of Employment and Social Affairs (2009) National Strategy Report, Social Protection and Social Inclusion 2008–2010. Berlin: BMAS.Google Scholar
BMAS – Bundesministerium für Arbeit und Soziales (Hrsg.) (2010a) Entwicklung der privaten Altersvorsorge. Berlin: BMAS. Available online at http://www.bmas.de/portal/47364/property=pdf/2010__08__11__entwicklung__private__vorsorge.pdf [Dated: 01.10.2010].Google Scholar
BMAS – Bundesministerium für Arbeit und Soziales (Hrsg.) (2010b) Zusätzliche Altersvorsorge. Berlin: BMAS.Google Scholar
Börsch-Supan, A. (2004) Mind the gap: the effectiveness of incentives to boost retirement saving in Europe. OECD Economic Studies, 2004(39): 111–144.Google Scholar
Börsch-Supan, A. and Wilke, C. (2004) The German Public Pension System, How it was, How it will be. NBER Working Paper No. 10525, Cambridge.Google Scholar
Börsch-Supan, A., Coppola, M., Essig, L., Eymann, A. and Schunk, D. (2008a) The German SAVE Study – Design and Results, MEA Studies 06. Mannheim: MEA.Google Scholar
Börsch-Supan, A., Essig, L. and Wilke, C. (2005) Rentenlücken und Lebenserwartung, Wie sich die Deutschen auf den Anstieg vorbereiten. Köln: Dt. Inst. für Altersvorsorge.Google Scholar
Börsch-Supan, A., Reil-Held, A. and Schunk, D. (2007) The Savings Behaviour of German Households – First Experiences with State Promoted Private Pensions. MEA Working Paper No. 136–2007, Mannheim.Google Scholar
Börsch-Supan, A., Reil-Held, A. and Schunk, D. (2008b) Saving incentives, old-age provision and displacement effects – evidence from the recent German pension reform. Journal of Pension Economics and Finance, 7(3): 295–319.Google Scholar
Buhmann, B., Rainwater, L., Schmaus, G. and Smeeding, T.M. (1988) Equivalence scales, well-being, inequality, and poverty: sensitivity estimates across ten countries using the Luxemburg income study (LIS) database. Income and Wealth, 34(2): 115–142.CrossRefGoogle Scholar
Chamberlain, G. (1984) Panel data. In Griliches, Z. and Intrilligator, M. (eds), Handbook of Econometrics, vol. 2, 1st edn. Amsterdam, The Netherlands: Elsevier, pp. 1247–1318.Google Scholar
Coppola, M. and Reil-Held, A. (2009) Dynamik der Riester-Rente: Ergebnisse aus SAVE 2003 bis 2008. MEA Working Paper No. 195–2009, Mannheim.Google Scholar
Corneo, G., Keese, M. and Schröder, C. (2009) The Riester scheme and private savings: an empirical analysis based on the German SOEP. Schmollers Jahrbuch, 129(2): 321–332.CrossRefGoogle Scholar
Corneo, G., Keese, M. and Schröder, C. (2010) The Effects of Saving Subsidies on Household Saving: Evidence from Germany. Ruhr Economic Papers No. 170. Universität Duisburg-Essen, Duisburg-Essen.Google Scholar
Duflo, E., Gale, W., Liebman, J., Orszag, P. and Saez, E. (2007) Savings incentives for low- and moderate-income families in the United States: why is the saver's credit not more effective? Journal of the European Economic Association, 5(2–3): 647–661.Google Scholar
EStG – Einkommensteuergesetz (2001) Einkommensteuergesetz in der Fassung der Bekanntmachung vom 8. Oktober 2009 (BGBI. I S. 3366, 3862), das zuletzt durch Artikel 7 des Gesetzes vom 22. Juni 2011 (BGBI. I S. 1126) geändert worden ist.Google Scholar
Fasshauer, S. and Toutaoui, N. (2009) Die Anzahl des förderberechtigten Personenkreises der Riester-Rente – eine Annäherung. Deutsche Rentenversicherung, 64(6): 478–486.Google Scholar
GDV – Gesamtverband der Deutschen Versicherungswirtschaft e.V. (2011a) 10 Jahre Riester-Rente: Und sie lohnt sich doch!.Google Scholar
GDV – Gesamtverband der Deutschen Versicherungswirtschaft e.V. (2011b) Die deutsche Lebensversicherung in Zahlen 2010/2011, Berlin.Google Scholar
Geyer, J. and Steiner, V. (2009) Zahl der Riester-Renten steigt sprunghaft – aber Geringverdiener halten sich noch zurück. DIW – Wochenbericht, 76(32): 534–541.Google Scholar
Greene, W.H. (2001) Fixed and Random Effects in Nonlinear Models. Working Paper No. 01-01, New York University, New York.Google Scholar
Greene, W.H. and Hensher, D.A. (2010) Modeling Ordered Choices, A Primer. Cambridge: Cambridge University Press.Google Scholar
Hagen, K. and Kleinlein, A. (2011) Zehn Jahre Riester-Rente: Kein Grund zum Feiern. DIW – Wochenbericht, 78(47): 3–14.Google Scholar
Lampig, W. and Tepe, M. (2009) Vom Können und Wollen der privaten Altersvorsorge: eine empirische Analyse zur Inanspruchnahme der Riester-Rente auf Basis des Sozio-ökonomischen Panels. Zeitschrift für Sozialreform, 55(4): 409–430.Google Scholar
Little, R.J.A. and Rubin, D.B. (2002) Statistical Analysis with Missing Data, 2nd ed.Hoboken, NJ: Wiley.Google Scholar
Maddala, G.S. (1983) Limited-Dependent and Qualitative Variables in Econometrics. Cambridge: Cambridge University Press.Google Scholar
Oehler, A. (2009) Alles ‘Riester’? Die Umsetzung der Förderidee in der Praxis, Gutachten im Auftrag des Verbraucherzentrale Bundesverbandes e.V., Bamberg.Google Scholar
Pfarr, C. and Schneider, U. (2011) Anreizeffekte und Angebotsinduzierung im Rahmen der Riester-Rente: Eine empirische Analyse geschlechts- und sozialisationsbedingter Unterschiede. Perspektiven der Wirtschaftspolitik, 12(1): 27–46.Google Scholar
Poterba, J.M., Venti, S.F. and Wise, D. A. (1995) Do 401(k) contributions crowd out other personal saving? Journal of Public Economics, 58(1): 1–32.Google Scholar
Rossi, M. (2009) Examining the interaction between saving and contributions to personal pension plans: evidence from the BHPS. Oxford Bulletin of Economics and Statistics, 71(2): 253–271.CrossRefGoogle Scholar
SAVE (2010) The German SAVE Study, Data from 2005 to 2009. Mannheim: SAVE.Google Scholar
Schulte, K. and Zirpel, U. (2010) Betting on a Long Life – the Role of Subjective Life Expectancy in the Demand for Private Pension Insurance of German Households. Economic Working Paper No. 2010–06, Christian-Albrechts-Universität Kiel, Kiel.Google Scholar
Siciliani, L. and Verzulli, R. (2009) Waiting times and socioeconomic status among elderly Europeans: evidence from SHARE. Health Economics, 18(11): 1295–1306.Google Scholar
Sommer, M. (2007) Fiskalische Auswirkungen einer Erweiterung des Förderrahmens von Riesterrenten. MEA Working Paper No. 122–2007, Mannheim.Google Scholar
Stiftung Warentest (2010) Private Altersvorsorge, 6th ed. Berlin: Stiftung Warentest.Google Scholar
Stolz, U. and Rieckhoff, C. (2010) Beitragsjahr 2007: Zulagenförderung nochmals um mehr als ein Viertel gestiegen. RVaktuell, 57(11): 355–362.Google Scholar
Verbeek, M. (2008) A Guide to Modern Econometrics, 3rd ed.Chichester: Wiley.Google Scholar