Najat El Mekkaoui de Freitas

Consumption Structure, Welfare Goods and Retirement Income:Linking the Ageing Puzzles

While the empirical evidence tends to support some predictions of the life-cycle theory, a number of puzzles remain: an ageing-consumption, an ageing-saving and a saving-capitalisation puzzles have been put forward in the literature. This paper analyses the links between these three puzzles and develops a model relating usual life-cycle variables, social transfers (public health care expenditures and the generosity of pension systems) to the level of savings. A reduced-form model using a panel of 18 OECD countries is tested, confirming the proposed explanations for the puzzles, together with other factors such as Ricardian equivalence and the population structure. We found that the relative generosity of welfare systems have a significant negative impact on household saving rate.

Health, Pension Benefits and Longevity How They Affect Household Savings?

This paper analyses the impact of health, pension systems and longevity on savings. It uses a simple life-cycle model embodying social transfers (health care and pension expenditures) and changes in longevity to determine the level of household savings. From this model, we derived an econometric specification, augmented with the effects of public budget balances. The model is estimated for a panel of 22 OECD countries for the period 1970-2009. Our principal result is that, from the point of view of incentive to save, health transfers have a similar impact as pension replacement rates. Therefore, welfare reforms that reduce replacement rates without reforming health system may not have all the expected impact on household savings. In line with life-cycle theory, we found that longevity increases saving ratios.

Pension Information and Retirement Planning in France: An Evaluation of Public Policy

Households will have to increase their retirement-related assets to face the consequences of pension reforms and/or increasing longevity. Thus, improving retirement planning seems then to be necessary. However, the literature reports a general lack of awareness and understanding of the pension system. Transferring information on pensions to households has been identified as a way for governments to increase the public understanding. In 2007, France began mailing out personalized annual Statements that provided estimates of an individual’s pension benefit. Using the French data of the European survey SHARE, we will assess the effectiveness of the pension information initiative if the statement contribute that workers are better informed about their pension benefits and if it changed their assets accumulation behavior. We have concluded that such pension policy has an impact on the wealthiest households who are able to integrate information and to put it into action. Conversely, this policy does not take the most vulnerable population into consideration and fails to fulfill its main objective: encourage households with little private savings to better prepare the retirement. This population does not seem able to save more after having received the pension statement. Consequently, the implementation of the pension information right generates or increases inequalities.