De Economist

, Volume 155, Issue 4, pp 347–415 | Cite as

Saving and Investing Over the Life Cycle and the Role of Collective Pension Funds

  • Lans Bovenberg
  • Ralph Koijen
  • Theo Nijman
  • Coen Teulings
Open Access


This paper surveys the academic literature on optimal saving and investment over an individual’s life cycle. We start out with a simple benchmark model with separable and smooth preferences, one aggregate risk factor and riskless wage income. Within this simple setting, optimal saving and investment behavior are explored from the perspective of individuals. Subsequently, we investigate various constraints to optimal individual decision making. We discuss how collective pension schemes may help to relieve some of the market incompleteness that arises from these constraints while at the same time introducing new types of constraints. Finally, various extensions to the benchmark setting are analyzed: a more elaborate modelling of human capital, additional risk factors, and other types of preferences.

Key words

saving investment life cycle pension schemes defined contribution defined benefit 

JEL Code(s)

D91 G11 G23 


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Copyright information

© Springer Science+Business Media, LLC. 2007

Authors and Affiliations

  • Lans Bovenberg
    • 1
  • Ralph Koijen
    • 1
  • Theo Nijman
    • 1
  • Coen Teulings
    • 2
  1. 1.Netspar and Tilburg UniversityTilburgThe Netherlands
  2. 2.Netspar and University of AmsterdamAmsterdamThe Netherlands

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