Articles

Co-authors: Katrín S. Másdóttir, Arnaldur S. Stefánsson, Herdis Steingrimsdottir and Gylfi Zoega

Status: In process, paper to be presented at the workshop "Consumption and Saving over the Life Cycle", Laugarvatn, Iceland, September 4-5, 2026, and at the PeRCent annual conference, CBS, Denmark, November 3, 2026.

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Abstract

This paper examines whether households respondto a decline in pension wealth by increasing their private saving. AlthoughIcelandic pension funds were not part of the economic and financialvulnerabilities leading up to the crisis, they were heavily affected by it,with losses varying substantially across funds. Some pension funds reducedaccrued pension rights. A particularly large shock occurred in the Engineer’spension fund (Lífsverk), which reduced pension benefits by 35% over a five-yearperiod. Using Icelandic administrative microdata and adifference-in-differences framework, this paper compares the saving behaviourof the individuals exposed to these pension benefit reductions with that ofsimilar individuals whose pension benefits were not reduced. Results showlittle evidence of a persistent increase in overall voluntary saving amongaffected households relative to the control group. There is, however, moresuggestive evidence of adjustment through Pillar III voluntary pension saving, includingdifferences in participation and withdrawal behaviour. These findings suggest thathouseholds may respond to losses in mandatory pension wealth by adjustingvoluntary pension saving, rather than substantially increasing other privatesaving.

Co-authors: Anna B. Esteba, Maria C. Louro and Alexandre Mendonca.

Status: Complete. Prepared for presentation at the 2026 Bruegel Annual Meeting (BAM), Brussels, September 2-3, and the workshop "Consumption and Saving over the Life Cycle", Laugarvatn, Iceland, September 4-7, 2026.

Co-authors: Miguel Sousa Duarte, Tim D. Maurer and Alessandro Simonotti

Status: In process, paper to be presented at the conference "Designing Pension Systems: Lessons from European Countries", to be held in Leiden, the Netherlands, March 4, 2027.

Co-authors: Alexandre Mendonca, David Pinkus and Nina Ruer

Status: In process, paper presented at the workshop Consumption and Saving over the Life Cycle, Laugarvatn, Iceland, August 29-30, 2025 (issued as Bruegel Working Paper 21/2024).

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Co-authors: Tuulia Hakola-Uusitalo, Torfinn Harding, Göran Hjelm, Anders Åkerman and Janne Tukiainen

Status: R&R, Journal of the Finnish Economic Association

Co-authors: Roel Beetsma, Jón Gudjónsson and Gylfi Zoega

Status: In process, previous version paper presented at PeRCent's annual conference, November 27, 2024

Co-authors: Frederik B. Christensen, Miguel Sousa Duarte and Tim D. Maurer

Status: Submitted

Co-authors:  Hazel Bateman and Inka Eberhardt Hiabu

Status: Under revision. Paper presented at Netspar International Pension Workshop, June 2025

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Co-athors: Arnaldur S. Kristjansson, SigurdurP. Olafsson, Thorsteinn S. Sveinsson and Gylfi Zoega

Status: R&R, Journal of Human Capital

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Co-authors: Michael Bergman and Andrea Tafuro

Status: Complete paper, ready for submission