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Evaluating alternative approaches for predicting pension benefits and incentives

Published online by Cambridge University Press:  18 February 2019

David Knapp*
Affiliation:
Economics, Sociology, and Statistics, RAND Corp Washington Office, 1200 South Hayes St., Arlington, Virginia, USA
Maciej Lis
Affiliation:
Directorate for Employment, Labour and Social Affairs, OECD, Paris, Île-de-France, France
Jinkook Lee
Affiliation:
University of Southern California, Los Angeles, California, USA
Drystan Phillips
Affiliation:
University of Southern California, Los Angeles, California, USA
*
*Corresponding author. Email: [email protected]

Abstract

In an effort to promote comparative research on pensions, the Gateway to Global Aging Data is developing harmonized cross-national panel data on pension benefits and retirement incentives. Past research has varied in how it predicts pension benefits for individuals who have not yet claimed their benefits when administrative data on earnings histories is unavailable. We use the Gateway data to evaluate several alternative approaches to computing prospective pension benefits using common survey questions and validate them against matched administrative data. We find that in some settings naïve measures of pension benefit growth from continued work and delayed benefit claiming can perform as well as measures based on administrative data. We also find that prospective benefit levels are sensitive to the heterogeneity of lifecycle earnings dynamics, resulting in substantial measurement error even after accounting for work history.

Type
Article
Copyright
Copyright © Cambridge University Press 2019

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