Pension reforms or consequences of the economic crisis? Measuring the changes of pension incomes in selected EU countries using APC approach

The pension incomes at different ages are changing in many developed countries. This reflects pension reforms that lead to changing pension levels, but also changes in the working lives leading to postponement of the retirement resulted from these reforms. The postponement of the introduction of changes which leads to the adjustment of the total pension transfers to younger cohorts can create pressure for more rapid reforms and higher variability of pension incomes between cohorts in the future. The pension incomes were also affected by the adjustments after financial and economic crisis in 2008. In the paper, we use age-period-cohort (APC) decomposition to measure the cohort effects of the age profiles of pension income changes of people born between 1927 and 1962 in Austria, Germany, Hungary, Poland and Sweden. The selected countries represent different labour market and pension systems characteristics. We analyse the cohort effects using the pension age profiles estimated according to the NTA approach in the period 2005–2013. Our analysis shows that there are cohorts effects are declining for younger cohorts. These negative effects are off-set by increasing age coefficients. This is, among others, the result of increasing retirement age and prolonging working lives. The adjustment of the pension levels to actuarially fair values was more visible and observed even before the crisis in countries with defined contribution or point system. Finally, the period effects indicate some reaction to the economic crisis.