It is well-known, however, that the low-educated on average live substantially shorter than the high-educated, and that they more often experience poor health before retirement date.
Likewise, in the second and third pillar, the conversion of pension wealth into annuity benefits is often based on portfolio-average mortality rates, which implies that the low-educated on average face welfare losses and the high-educated enjoy welfare gains when the pool is heterogeneous with respect to educational level. In addition, retirees of all educational levels face welfare losses when the investment strategy used by the annuity provider is not tailored to their personal risk preferences.
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