Pension Insecurity and Wellbeing in Europe

This paper studies pension insecurity in a sample of non-retired individuals aged 50
years or older from 18 European countries. We capture pension insecurity with the subjective
expectations on the probability that the government will reduce the pensions of the individual
before retirement or will increase the statutory retirement age. We argue that changes in
economic conditions and policy affect the formation of such probabilities, and through this,
subjective wellbeing. In particular, we study the effects of pension insecurity on subjective
wellbeing with pooled linear models, regressions per quintiles and instrumental variables. We
find a statistically significant, stable and negative association between pension insecurity and
subjective wellbeing. Our findings reveal that the individuals who are more affected by pension
insecurity are those who are further away fromtheir retirement, have lower income, assess their
life survival as low, have higher cognitive abilities and do not expect private pension payments.