Pension reform sustainability in the EU: a pension wealth-based framework
Most assessments of pension sustainability focus on the projected fall in spending. However interest in the impact on adequacy, usually measured by replacement rates, is increasing. In this paper we show that replacement rates have significant defects, related to being point-in-time indicators and the use of unrepresentative assumptions. We argue for the use of pension wealth calculated using more realistic assumptions. Looking at ten EU countries, we find that while generosity decreased significantly, systems’ effectiveness in alleviating poverty remain strong in countries where minimum pensions were improved. However, moves to link benefits to contributions have raised concerns for women and for those on low incomes. Though reforms have reduced the fiscal challenge of ageing, in many countries pressures will persist and further reforms are likely.
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- Ondřej Schneider, 2009.
"Reforming Pensions in Europe: Economic Fundamentals and Political Factors,"
Working Papers IES
2009/08, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Feb 2009.
- Ondøej Schneider, 2009. "Reforming Pensions in Europe: Economic Fundamentals and Political Factors," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 59(4), pages 292-308, Oktober.
- Ondrej Schneider, 2009. "Reforming Pensions in Europe: Economic Fundamentals and Political Factors," CESifo Working Paper Series 2572, CESifo Group Munich.
- Sveinbjörn Blöndal & Stefano Scarpetta, 1999. "The Retirement Decision in OECD Countries," OECD Economics Department Working Papers 202, OECD Publishing.
- Robert Holzmann & Richard Hinz, 2005. "Old Age Income Support in the 21st century: An International Perspective on Pension Systems and Reform," World Bank Publications, The World Bank, number 7336, January.
- Grech, Aaron George, 2007. "Pension policy in EU25 and its impact on pension benefits," MPRA Paper 33669, University Library of Munich, Germany.
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