P.J.A. van Els

Why mandatory retirement saving

More than 90% of employees in the Netherlands compulsorily accrue pensions via their employer. Experiences abroad, supplemented by empirical research among Dutch households, suggest that, without this automatism, large groups of employees would build up much less pension. Procrastination, self-control problems, and limited financial knowledge and skills frequently lead to low pension savings and low returns on the accrued pension capital. Mandatory retirement saving prevents these problems. The Dutch mandatory participation works well and there is no reason for drastic modifications. What can be studied, however, is how mandatory retirement saving for the self-employed can result in a better pension build-up.

Dynamic portfolio models with long-term restrictions

SummaryDynamic portfolio models have obtained a prominent place in the economic literature. As a rule, the problem of implausible long-term coefficients is ignored. In particular the long-term interest rate parameters are not in accordance with the theory of gross substitution. This shortcoming is especially serious when such a portfolio model is used as part of a larger macroeconomic model. A standard estimation-under-restriction procedure cannot be applied as these long-term coefficients are nonlinear functions of short-term interest rate coefficients and of the coefficients of the adjustment process. This paper introduces a new estimation procedure, which is used to estimate portfolio models for households and banks in The Netherlands.