The Influence of Social Models on Retirement Savings: Evidence for European Countries


Population ageing, together with the negative effects of the recent economic and financial crisis that some European countries are still facing, have threatened the sustainability of public pension systems. In this context, voluntary private pensions have emerged as the most feasible alternative to supplement the minimum provided by Social Security Systems; however, this financial product does not enjoy its expected popularity. A potential explanation of this reality might be due to the fact that European countries are far from being homogeneous, nor their pensions systems. Therefore, any policy geared toward improving financial retirement planning should take into account these potential differences. As a first approach to their analysis, this paper proposes the existence of four different ‘social models’ in Europe -namely, Continental, Mediterranean, Nordic and Transitional-. Overall, empirical evidence confirmed the significant influence of country’ ‘social model’ on the decision to invest in retirement accounts on a sample of 31,468 individuals in 2013. It was also proved that this decision is positively related to age, household income and wealth, higher levels of formal education, job situation, good health status, and long-term planning horizons; and negatively related to age squared, household size or financial risk aversion. In short, future policies and reforms regarding private pensions should not only take into account the existence of individual differences among Europeans, but also the existence of differences depending on institutional and cultural country factors.

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  1. 1.

    Banks and Oldfield (2007) found, in a sample of older adults in England, that numeracy levels are correlated with the ownership of private pensions, even after controlling for other cognitive abilities and education. However, they do not show unequivocally that lower numeracy levels cause people to save less, as the direction of causality could run in the inverse direction.

  2. 2.

    The correlation matrix of covariates is displayed in Table 7 in the Appendix 2 and reveals that the association between educational attainment and job situation, as well as between educational attainment and numeracy, change its negative sign to positive as educational attainment improves.


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‘This paper uses data from SHARE Wave 5 (DOI: 10.6103/SHARE.w5.100), see Börsch-Supan et al. (2013) for methodological details. The SHARE data collection has been primarily funded by the European Commission through FP5 (QLK6-CT-2001-00360), FP6 (SHARE-I3: RII-CT-2006-062193, COMPARE: CIT5-CT-2005-028857, SHARELIFE: CIT4-CT-2006-028812) and FP7 (SHARE-PREP: No. 211909, SHARE-LEAP: No. 227822, SHARE M4: No. 261982). Additional funding from the German Ministry of Education and Research, the U.S. National Institute on Aging (U01_AG09740-13S2, P01_AG005842, P01_AG08291, P30_AG12815, R21_AG025169, Y1-AG-4553-01, IAG_BSR06-11, OGHA_04-064) and from various national funding sources is gratefully acknowledged (see’ The authors are also grateful to the Spanish Ministry of Education, Culture and Sport (MECD) for financial support through the ‘Becas de Formación del Profesorado Universitario 2014’.

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Correspondence to Lucía Rey-Ares.


Appendix 1: SHARE Numeracy Test

The set of questions asked in the SHARE numeracy test are indicated below. The grid of possible answers is never shown to the respondent.


If the chance of getting a disease is 10 per cent, how many people out of 1000 (one thousand) would be expected to get the disease? The possible answers are 100, 10, 90, 900 and another answer.


In a sale, a shop is selling all items at half price. Before the sale, a sofa costs 300 euro. How much will it cost in the sale? The possible answers are 150, 600 and another answer.


A second hand car dealer is selling a car for 6000 euro. This is two-thirds of what it costs new. How much did the car cost new? The possible answers are 9000, 4000, 8000, 12,000, 18,000 and another answer.


Let’s say you have 2000 euro in a savings account. The account earns ten per cent interest each year. How much would you have in the account at the end of 2 years? The possible answers are 2420, 2020, 2040, 2100, 2200, 2400 and another answer.

The test on numeracy starts with question 1 (Q1). If the respondent answers this question correctly, then he/she is asked Q3; otherwise, Q2 is asked and the test ends. If the respondent answers Q3 correctly, then he/she is asked Q4 and the test ends.

Answering Q1 correctly -but not Q3- results in a score of 3; answering Q3 correctly -but not Q4- results in a score of 4, while answering Q4 correctly results in a score of 5. Answering Q2 incorrectly gives a score of 1, while answering this question correctly gives a score of 2. Figure 1 graphically summarizes this information.

Fig. 1

Numeracy score

All questions of SHARE numeracy test try to assess how people use numbers in everyday life. In this regard, Q1, Q2 and Q3 involve simple arithmetical calculations, while Q4 needs the knowledge of financial concepts -in particular, compound interest- and is thus more related to financial literacy (Fig. 1).

Appendix 2: Correlation Matrix

See Table 7.

Table 7 Correlation matrix of the covariates used in the analysis

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Rey-Ares, L., Fernández-López, S. & Vivel-Búa, M. The Influence of Social Models on Retirement Savings: Evidence for European Countries. Soc Indic Res 136, 247–268 (2018).

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  • Social model
  • Retirement account
  • Private pension plan
  • Europe