Retirement Savings by Self-Employed: a behavioral investigation

The pension system in the Netherlands is based on regular employed employees. Self-employed have to arrange their pensions by themselves. The saving opportunities and incentives are much smaller for self-employed due to government regulation. Since self-employed have to fix their after retirement income by themselves, the pre-retirement behavior is very important. This thesis combines economic theories and behavioral insights to find an answer on the question if, in the case of pension provision to self-employed, an individual approach will be more profitable than a collective approach. Therefore this thesis investigates the differences in pension payments, savings and motives between different groups of self-employed based on their characteristics. Data of three large datasets, containing financial and behavioral information has been used. The savings, motivation to save and the pension payments are investigated. Personal characteristics like level of education, being the main wage earner and individual income variability affect the saving behavior and financial position of self-employed. The motivation to save for retirement differs between self-employed owing to their behavioral characteristics as well as to the perception of the personal income situation relative to previous years and relative to other self-employed. Finally, the implications for the pension providers are discussed.