International Pension Workshop 2024: daring to ask questions and learning from other disciplines

The International Pension Workshop is a wrap. It was three successful days full of meetings and knowledge exchange between different disciplines. This was done through 21 sessions on a variety of topics, 59 paper presentations and discussants, and two keynote speakers. A report on the conference and an interview with two participants: Hazel Bateman and Pierre-Carl Michaud.

The conference takes place in Leiden, which is also known in Dutch as the “City of Discoveries”. This refers not only to the first university of the Netherlands founded here, but also to the scientific discoveries made here. It is a fitting setting for the gathering of more than a hundred pension researchers from all over the world. They meet each other in the Level building next to the Leiden train station, a glass colossus that offers views of the wide surroundings on all sides.

In a packed room named Leidse Meesters (Leiden Master Painters), the plenary opening takes place. “To my knowledge, it is the first time we have a joint opening during the International Pension Workshop,” says Netspar Scientific Director Mathijs van Dijk. “This is not very common at scientific conferences, but offers the opportunity to give a short introduction for those who are not yet so familiar with Netspar.”

“Dare to ask questions”

Moments later, this introduction proves to be welcome. Indeed, when Netspar Director Lisa Brüggen takes over, she asks who is here for the first time. Quite a large portion of the audience raises their hands. Then Brüggen recalls her own experience when she first attended the International Pension Workshop. At the time, she did so only from her background as a researcher in the fields of communication and choice guidance.

Brüggen: “I really enjoyed my first conference because I learned so many new things there. It was also fascinating to see how other disciplines approached research and to learn more about content and methodology. But I still remember that I felt a little bit stupid sometimes back then when it came to other disciplines. So dare to ask questions, because especially questions from other disciplines can challenge us and make us realize that assumptions we make should maybe be reconsidered or checked. There is so much to learn from each other.”

Brüggen then reflects on the Dutch PensioenPro Award presented the previous evening to Theo Nijman, Research Director of Netpar. This award is given to individuals who have made a special contribution to the pension sector or the pension system, either in the past year or over a longer period of time. Brüggen on the awarding of this prize: “This is not only illustrating the immense contribution that Theo has made academically, but also his impact on the entire pension sector.”

After this opening, the international audience disperses into different rooms. The researchers participate in parallel sessions on topics such as pension communication, health, pension systems and lifecycle choices. In doing so, they present and discuss their papers.

Netspar Talent Grant

Finally, at the end of the day, it becomes clear to whom the Netspar Talent Grant will go. This grant aims to introduce promising researchers into the Netspar network and into pension practice. For 2024, the grant will go to Anouk Festjens, associate professor in Maastricht who received her doctorate in Leuven.

Festjens originally studied mainly risk preferences and time preferences in experimental research. “Risk measures and time preference methodologies always remained very abstract to me,” she tells the audience in the plenary room. Through her Netspar Theme Grant, however, she came in contact with Netspar. “Within this project, I talked to many people who work at pension funds and I found it an eye opener to see that people actually use these metrics.”

She will use her proposal titled “Pension-related decision-making of financially strained citizens” to explore how policymakers can better understand and take into account people’s preferences so that they are not disadvantaged in the new pension system.

U.S. retirement landscape

Day one comes to a close with the keynote by Joshua Rauh, Professor of Finance at Stanford’s Graduate School of Business and Senior Fellow at Hoover Institution. In his keynote, he outlines the U.S. retirement landscape. This is bimodal, with government employees largely in Defined Benefit (DB) pension plans and private sector employees in Defined Contribution (DC) pension plans.

Rauh then discusses changes in the pension landscape. A major problem with DB plans for government employees is that they are “underfunded”, so governments effectively have a large unfunded liability to employees. One potential way to avoid compounding this problem is to move (in part) to DC plans.

According to Rauh, a common counterargument is that government employees do not want a DC plan at all. Through a survey of government employees, he examined the relative acceptance they have for DC plans. In doing so, one result is that as many as 89 percent of those surveyed are willing to accept a DC plan instead of a DB plan, and often at a cost to the government that is lower than that of current DB plans.

Research on decumulation

On the second day, the parallel sessions continue. Topics discussed include retirement choices, labor supply, mortgages and housing, pension reform, welfare, household finance and preferences. The closing keynote is delivered by Suzanne Shu, Professor of Marketing at Cornell University’s SC Johnson College of Business.

In her talk, Shu addresses decumulation, or how to draw down assets in an optimal way to provide income in retirement. She says decumulation does not get enough attention, especially from behavioral scientists. For example, much research in the United States and abroad is about the accumulation phase, for example, about increasing retirement savings in this phase using interventions such as nudges.

Shu then discusses her research on how people make decisions in the decumulation phase. For example, where subjective perceptions are concerned that people have about their expected longevity. When asked “What’s the chance you live to age 85?” people estimate this at 55 percent. If you ask, “What’s the chance you die by age 85?”, this figure is 68 percent. So how you ask affects this.

Optimal decisions in the decumulation phase vary from person to person. Still, many people make decisions that seem unwise, such as not converting a saved capital into an annuity that guarantees lifetime benefits and withdrawing retirement benefits from U.S. Social Security too early, when those benefits are then lower. Factors involved include the complexity of the decision, loss aversion and a lack of trust in financial institutions and institutions in general.

Finally, the second day culminates with, among other things, a city tour of Leiden. Then on the third day, the International Pension Workshop ends with a half-day full of parallel sessions on finance, disability, retirement and work, savings and health, among other topics.

Participants take the floor: Hazel Bateman

Hazel Bateman is Professor of Economics at the Centre of Excellence in Population Ageing Research (CEPAR) within the University of New South Wales. She is also based at the School of Risk and Actuarial Studies, part of the same Australian university. For Netspar, she is the Chair of the Scientific Council. Finally, she is the President of the International Pension Research Association (IPRA), of which Netspar is one of the four founding organizations together with CEPAR, the Pension Research Council and the OECD.

The International Pension Workshop is an important network opportunity for Bateman. “As researchers based in Australia, we are more isolated than Europeans or Americans. It is really important for us – but also for our senior researchers and our students – to network with the rest of the world. So when we first found out about the International Pension Workshop in 2011, we tried very hard to get on the program. Since then, I have come here every time with my co-authors and groups of students.”

Bateman is convinced that Australia and the Netherlands can learn from each other. “Some of the presentations that my colleagues are giving are set in the Australian setting, but have international lessons, specifically for the Dutch, now that the pension system is moving. Personally, I am interested these days in choice and decision making. That is because the Australian pension system has a lot of choice components. Now with the Dutch reforms, there will be more choice in the Dutch system and research about this.”

Just last week, Bateman attended the ninth IPRA conference in Paris. In addition to this conference, IPRA is also organizing webinars for the past several years. These are focused on a more global network. Bateman: “Nice thing about these webinars is that we can connect to researchers in countries where there is only a handful of pension researchers, like African countries. We invite them to webinars where they can be exposed to top researchers from around the world. It is like a service to the rest of the world to share knowledge.”

Participants take the floor: Pierre-Carl Michaud

Pierre-Carl Michaud is Professor of Economics at HEC Montréal. He is doing research into how people make financial decisions, health dynamics and the interplay between these two subjects. Besides that, he is Scientific Director of the Canadian Retirement and Savings Institute, which is part of this university institution. He has been coming to the International Pension Workshop for nearly two decades.

“This conference has always been on the map for me”, Michaud says. “It is not only one of the key conferences where many of the pension experts in the academic world meet up to present and discuss their work. Also some of the best talent is present here in terms of young researchers. So for someone who is leading an institute like me, this is a major place to see new faces in the field.”

The way Netspar organizes conferences inspires him. “I think that it is selective at the right level, making the quality of what gets presented really good. There is a lot of innovative research, so it’s not everyone basically doing the same thing with the same methodology. And even though there are also technical papers, I see a preoccupation with making sure that the research that is presented is actually policy relevant. This makes it a good example for many of us elsewhere around the world.”

What insights from today will Michaud take home? “I saw a nice presentation this morning using very good Dutch data. Retirement savings adequacy, investigating whether people are saving enough for retirement, requires appropriate data. The Netherlands is a leading example around the world in terms of what sort of data you need for this. So I found some examples today of new data sets we need to think about merging in Canada.”