*Names in bold indicate Presenter
This paper is the first to utilize national pension policy change as a natural experiment to identify the impact of private pensions on household voluntary savings. Specifically, I evaluate the household saving response to mandatory employer-provided pension reform in Taiwan, which mandates that all private sector employers contribute at least 6% of the wage to employees' individual pension accounts monthly since 2005.
I use the workers in the unaffected sector as a comparison group and employ a difference-in-differences method to estimate the impact of the reform on household saving rate. My results suggest that making private pensions mandatory significantly reduces prime-age (20--50) household saving rate by 2.06% to 2.45% and imply the degree of substitutability between private pension and saving is about -0.51 to -0.61. Since private pensions only partially offset household saving, the mandatory private pension policy could effectively raise employees' retirement wealth.
- Proposal_pension_saving_v66.pdf (1198.0KB)