Savings for retirement under liquidity constraints: a note

Pension systems often entail some compulsory saving over which individuals have some degree of choice in terms of the pension plan in which to invest. Our contribution analyses whether the choice between alternative plans is affected by the presence of liquidity constraints during working life. We show that liquidity constraints obviously affect the amount saved and consumed during working life but they do not affect the decision on which pension plan to choose. In fact we prove that the analytical conditions that determine the choice between different plans are the same in the constrained and unconstrained case.