HOUSEHOLD SAVING BEHAVIOUR:

The Dutch pension fund sector has been in trouble since the start of the financial crisis. A combination of low returns on the stock markets, low interest rates and high solvency requirements are forcing pension funds to postpone the indexation of their pensions. Households are facing a decrease in future income and have to compensate these losses themselves. The goal of this paper is to analyse whether households increase their savings as a reaction to the shock in future income. Where previous literature addressed this question with multivariate regressions over time, will I take a difference-in-difference approach. The advantage of this approach is that the change in savings can be attributed to the shock in future income. A result is that the working population is not adjusting their savings to a shock in future income, but that households who are aware of the financial situation of their pension income have significantly higher savings. For the retired population, a significant displacement effect between pension wealth and savings is found. There is found that retirees increase their savings by about 25 percent as a result of a decrease in pension wealth. An implication of this result is the hoarding of wealth among retirees as a result of problems in the pension fund sector.