Please be invited to the upcoming Latvijas Banka’s Research seminar, to take place on 23 July 10:30-12:00, in which David Burgherr (University of Zurich) will present his work: Saving Responses to Mandatory and Voluntary Pension Contributions
Abstract. To boost retirement savings, many countries mandate worker contributions to pension accounts. This paper investigates saving responses to such mandates throughout the entire portfolio, leveraging detailed administrative tax data from Switzerland and a regression discontinuity design. I find that mandatory pension plans have limited effects on total savings, with an estimated crowd-out rate of 94%. Decomposing the saving response, I show that workers offset mandatory pension contributions by reducing private non-retirement savings, primarily in financial assets. By contrast, there is no substitution between mandatory and voluntary pension savings. Liquidity-constrained workers are less able to reduce private savings in response to mandatory contributions and therefore increase their total savings.