Pension fund investment policy, risk-taking, ageing and the life-cycle hypothesis

Jacob A. Bikker; Dirk W.G.A. Broeders; David A. Hollanders; Eduard H.M. Ponds

doi:10.4324/9781315621739-7

Pension fund investment policy, risk-taking, ageing and the life-cycle hypothesis

Jacob A. Bikker^*, Dirk W.G.A. Broeders, David A. Hollanders, Eduard H.M. Ponds

^*Corresponding author for this work

Finance

Research output: Chapter in Book/Report/Conference proceeding › Chapter › Academic

Abstract

This chapter examines the impact of participants’ age distribution on the asset allocation of Dutch pension funds, using a unique dataset of pension fund investment plans for 2007. Theory predicts a negative effect of age on (strategic) equity exposures. We observe that a one-year higher average age in active participants leads to a significant and robust reduction of the strategic equity exposure by around 0.5 percentage point. Larger pension funds show a stronger age-equity exposure effect. The average age of active participants influences investment behaviour more strongly than the average age of all participants, which is plausible as retirees no longer possess any human capital.

Original language	English
Title of host publication	Pension Fund Economics and Finance
Subtitle of host publication	Efficiency, Investments and Risk-Taking
Editors	Jacob Bikker
Place of Publication	London
Publisher	Taylor and Francis
Chapter	7
Pages	141-162
Number of pages	22
ISBN (Electronic)	9781315621739
ISBN (Print)	9781138656802
DOIs	https://doi.org/10.4324/9781315621739-7
Publication status	Published - 22 Nov 2017

Access to Document

10.4324/9781315621739-7

Cite this

@inbook{d44ec1cc4e50418db883d3fe5a1fe33c,

title = "Pension fund investment policy, risk-taking, ageing and the life-cycle hypothesis",

abstract = "This chapter examines the impact of participants{\textquoteright} age distribution on the asset allocation of Dutch pension funds, using a unique dataset of pension fund investment plans for 2007. Theory predicts a negative effect of age on (strategic) equity exposures. We observe that a one-year higher average age in active participants leads to a significant and robust reduction of the strategic equity exposure by around 0.5 percentage point. Larger pension funds show a stronger age-equity exposure effect. The average age of active participants influences investment behaviour more strongly than the average age of all participants, which is plausible as retirees no longer possess any human capital.",

author = "Bikker, {Jacob A.} and Broeders, {Dirk W.G.A.} and Hollanders, {David A.} and Ponds, {Eduard H.M.}",

year = "2017",

month = nov,

day = "22",

doi = "10.4324/9781315621739-7",

language = "English",

isbn = "9781138656802",

pages = "141--162",

editor = "Bikker, {Jacob }",

booktitle = "Pension Fund Economics and Finance",

publisher = "Taylor and Francis",

address = "United Kingdom",

}

Pension fund investment policy, risk-taking, ageing and the life-cycle hypothesis. / Bikker, Jacob A.; Broeders, Dirk W.G.A.; Hollanders, David A. et al.
Pension Fund Economics and Finance: Efficiency, Investments and Risk-Taking. ed. / Jacob Bikker. London: Taylor and Francis, 2017. p. 141-162.

Research output: Chapter in Book/Report/Conference proceeding › Chapter › Academic

TY - CHAP

T1 - Pension fund investment policy, risk-taking, ageing and the life-cycle hypothesis

AU - Bikker, Jacob A.

AU - Broeders, Dirk W.G.A.

AU - Hollanders, David A.

AU - Ponds, Eduard H.M.

PY - 2017/11/22

Y1 - 2017/11/22

N2 - This chapter examines the impact of participants’ age distribution on the asset allocation of Dutch pension funds, using a unique dataset of pension fund investment plans for 2007. Theory predicts a negative effect of age on (strategic) equity exposures. We observe that a one-year higher average age in active participants leads to a significant and robust reduction of the strategic equity exposure by around 0.5 percentage point. Larger pension funds show a stronger age-equity exposure effect. The average age of active participants influences investment behaviour more strongly than the average age of all participants, which is plausible as retirees no longer possess any human capital.

AB - This chapter examines the impact of participants’ age distribution on the asset allocation of Dutch pension funds, using a unique dataset of pension fund investment plans for 2007. Theory predicts a negative effect of age on (strategic) equity exposures. We observe that a one-year higher average age in active participants leads to a significant and robust reduction of the strategic equity exposure by around 0.5 percentage point. Larger pension funds show a stronger age-equity exposure effect. The average age of active participants influences investment behaviour more strongly than the average age of all participants, which is plausible as retirees no longer possess any human capital.

U2 - 10.4324/9781315621739-7

DO - 10.4324/9781315621739-7

M3 - Chapter

SN - 9781138656802

SP - 141

EP - 162

BT - Pension Fund Economics and Finance

A2 - Bikker, Jacob

PB - Taylor and Francis

CY - London

ER -