Qualitative Analysis of Early Pension Withdrawal in Defined Benefit Schemes: A Case National Pension Scheme Authority (NAPSA) in Zambia

Abstract

This paper aims to look at model retirement behavior with a focus on early retirement where there is an option for “buy‐outs”. An employer can offer employees generous pension programs if the employees agree on early retirement. Earlier studies have neglected such offers, but in doing so, estimates of the individuals' responses to financial incentives in a retirement decision are likely to be biased upward. Design/methodology/approach: The authors propose an estimation strategy where the retirement decision and the accesses to Early Retirement Pension (ERP) offers are estimated in a simultaneous equation system, yielding unbiased estimates of the model parameters. They apply the model using detailed Swedish register data.