The Influence of Default Options on the Timing of Retirement : A study of the automatic payout in the Swedish occupational pension system

Abstract: This thesis examined a change of the automatic payout age of a Swedish occupational pension agreement. The purpose of the study was to see if the default option can nudge the retirement decision. The study was based on previous behavioral economic research, showing that default options can be strongly influential in the accumulation phase of pension wealth. Using a difference-in-difference framework, the estimation shows no significant result of the default option influencing the labor supply of older workers. The result implies that people could be more rational regarding their retirement than their savings. This result should discourage policymakers from intervening too much in people’s retirement decisions, as it could lead to undesired consequences. To my knowledge, this is the first study to investigate if a default option can influence the retirement decision.