Building a supplementary retirement income: what are the determining factors?

Summary What are the determinants of the ownership of long-term savings products used by households to finance their retirement? To answer this question, we use data from the latest wealth survey and propose an econometric analysis of the holding rates of various retirement savings and life insurance products. French households take out life insurance more frequently when they want to save for the long term. While they have historically been reluctant to take out private retirement savings products, the 2003 reform of the pension system led to the introduction of new products specifically dedicated to supplementary retirement financing. The 2010 wealth survey incorporates these new retirement savings products. We show using decision models (probit-variate) that life insurance and retirement savings holdings are complementary and guided by common factors. Age and household composition remain the primary determinants of holding behavior: younger people take out this type of savings product less frequently, while couples seem to have an additional reason for building up long-term savings: protection of the surviving spouse. The self-employed, whether still working or not, are also more likely than private sector employees to have savings products that can be used to finance retirement. Moreover, after controlling for the standard of living of the household to which they belong, it appears that not being a graduate has a significant and relatively large negative impact on the holding of life insurance and retirement savings contracts. Thus, not having a degree increases the.