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An assessment of PenSim2


  • Carl Emmerson

    () (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Howard Reed

    (Institute for Fiscal Studies)

  • Andrew Shephard

    () (Institute for Fiscal Studies and University of Pennsylvania)


The Department for Work and Pensions (DWP)’s Pensim2 model is a dynamic microsimulation model. The principal purpose of this model is to estimate the future distribution of pensioner incomes, thus enabling analysis of the distributional effects of proposed changes to pension policy. This paper presents the results of an assessment of Pensim2 by researchers at the IFS. We start by looking at the overall structure of the model, and how it compares with other dynamic policy analysis models across the world. We make recommendations at this stage as to how the overall modelling strategy could be improved. We then go on to analyse the characteristics of most of the individual modules which make up Pensim2, examining the data used and the regression and predictions used in each step. The results from this examination are used to formulate a set of short and medium-term recommendations for developing and improving the model. Finally, we look at what might become possible for the model over a much longer time frame looking towards developing a ‘Pensim3’ model over the next decade or so.

Suggested Citation

  • Carl Emmerson & Howard Reed & Andrew Shephard, 2004. "An assessment of PenSim2," IFS Working Papers W04/21, Institute for Fiscal Studies.
  • Handle: RePEc:ifs:ifsewp:04/21

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    References listed on IDEAS

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    Cited by:

    1. Jinjing Li & Cathal O'Donoghue, 2012. "Simulating Histories within Dynamic Microsimulation Models," International Journal of Microsimulation, International Microsimulation Association, vol. 5(1), pages 52-76.
    2. Aaron George Grech, 2013. "How best to measure pension adequacy," CASE Papers case172, Centre for Analysis of Social Exclusion, LSE.
    3. Justin van de Ven, 2016. "LINDA: A dynamic microsimulation model for analysing policy effects on the evolving population cross-section," National Institute of Economic and Social Research (NIESR) Discussion Papers 459, National Institute of Economic and Social Research.
    4. Li, Jinjing & O'Donoghue, Cathal, 2012. "A methodological survey of dynamic microsimulation models," MERIT Working Papers 002, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    5. Emanuele Ciani & Marcello Morciano, 2011. "Estimation and Simulation of Earnings in IT-SILC," Center for the Analysis of Public Policies (CAPP) 0090, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    6. repec:cep:sticas:/172 is not listed on IDEAS

    More about this item


    pensions; microsimulation; policy analysis;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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