The Pension Transition: More Pension More Spending

This report analyzes the macroeconomic impact of the Dutch pension transition, finding that 1.5 million retirees will receive income increases that translate into a 22% marginal propensity to consume. This will provide a modest EUR 500 million boost to the Dutch economy in 2026.

Key Takeaways

• 1.Approximately 1.5 million Dutch retirees are receiving a 'conversion bonus' indexation due to the pension system transition in 2026.
• 2.Retirees spend an average of only 22% of every additional euro of pension income (Marginal Propensity to Consume).
• 3.The spending impulse is stronger among retirees with lower incomes or limited financial buffers, rising to around 40% for the latter group.

Table of Contents

• Retirees notice the pension transition in their wallets
• Research design
• Pension incomes have increased in recent years, ...
• ... but older people do not spend all their income
• Low marginal propensity to consume
• Only part of each additional euro of pension income is spent
• Lower income and limited savings signal a stronger spending impulse
• A modest boost at a time when consumption is slowing
• The new pension system entails more risk, which may dampen spending
• Conclusion
• Data and Methodology
• Definitions & panel selection

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