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Financial and redistributive impact of reforming the old-age pension system in Belgium

  • Marjan, MAES

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)

The effects of three reforms of the Belgian old-age pension system were examined on retirement behaviour, government budget and income distribution of the old-age retired. On the basis of a large administrative micro-dataset used to estimate and simulate a discrete-time hazard model we found that reforms of the old-age pension system that penalize early retirement, and in particularly penalize early retirement of the rich more than the poor, are not only the ones that enhance the financial sustainability of the system at most but at the same time lead to the strongest decrease of income ineduality and relative poverty among the old-age retired. On the contrary, reforms that compensate retirement beyond the age of eligibility like the “pension bonus†recently implemented in Belgium lead to budget deficits and at the same time to a higher income ineduality among the old-age retired. Finally, it was shown that the impact of reforming the old-age pension system may be limited by individuals that have the prospect of receiving occupational pension benefits, among others because in Belgium these are subject to an extremely generous fiscal treatment

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Paper provided by Université catholique de Louvain, Département des Sciences Economiques in its series Discussion Papers (ECON - Département des Sciences Economiques) with number 2008040.

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Length: 47
Date of creation: 01 Dec 2008
Date of revision:
Handle: RePEc:ctl:louvec:2008040
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  18. repec:ese:iserwp:2005-05 is not listed on IDEAS
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