The Third Pillar in Europe: Institutional Factors and Individual Decisions

Julia Le Blanc 1
1Deutsche Bundesbank, Germany, 2Gothe-University, Germany

This paper studies household participation in voluntary individual retirement accounts in eleven European countries. We present a detailed overview of how each country has designed the interplay between public, occupational and voluntary pension schemes. Using recently available, internationally comparable data of households aged 50+, we calculate country-by-country average marginal effects. Our results indicate that households' participation in the third pillar varies substantially across countries. While spill-over effects from mandatory accounts are likely, incentives only have limited effects. Moreover, higher education is crucial for participation. However, differences across countries cannot only be explained by institutional factors, leaving room for individual decisions.

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