Financial incentives for delaying the public pension claiming age

Abstract

We investigate whether financial incentives can prompt senior workers to delay claiming public pension benefits in Japan. We explore two types of incentives: increasing public pension benefits beyond actuarial adjustments and offering discounts on investments for short-term personal insurance products that provide a stable cash flow until the pension-claiming age. Utilizing choice experiments conducted through an original internet survey of Japanese employees, we demonstrate that these incentives effectively increase the pension-claiming age. Specifically, a 1.2 % increase in pension benefits or a 19.4 % additional yield on short-term personal insurance is necessary to delay claiming by one year on average. Moreover, incentives for insurance products are more cost-effective for the government. Our findings also reveal significant heterogeneity in financial incentive preferences among individuals, influenced by factors such as survival probabilities, trust in public pensions, and socioeconomic status.