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The impact of pension system reform on projected old-age income: the case of Poland

Author

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  • Elena Jarocinska
  • Anna Ruzik-Sierdzinska

Abstract

This paper analyses the distributional effects of the Polish old-age pension reform introduced in 1999. Following a benchmark Mincer earnings equation, and using a newly developed microsimulation model we project future pension benefits for males born in years 1969–1979. We find that inequality of predicted first pension benefits measured by the Gini coefficient increases from 0.119 to 0.165 for cohorts of men retiring between 2036 and 2046. The observed increased inequality of pension benefits is due to the decreasing share of initial capital that is based on a more generous DB formula in the total accumulated pension capital. At the same time, inequality in replacements rates decreases due to a stronger link between contributions paid through the entire working life and pension benefits.

Suggested Citation

  • Elena Jarocinska & Anna Ruzik-Sierdzinska, 2016. "The impact of pension system reform on projected old-age income: the case of Poland," CASE Network Studies and Analyses 0482, CASE-Center for Social and Economic Research.
  • Handle: RePEc:sec:cnstan:0482
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    File URL: http://www.case-research.eu/sites/default/files/publications/S%26A_482_5.pdf
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    References listed on IDEAS

    as
    1. Elena Jarocinska & Anna Ruzik-Sierdzinska & Theo Nijman & Andres Vork & Niku Määttänen & Robert Gál, 2014. "The impact of living and working longer on pension income in five European countries: Estonia, Finland, Hungary, the Netherlands and Poland," CASE Network Studies and Analyses 0476, CASE-Center for Social and Economic Research.
    2. Monika Queisser & Edward Whitehouse, 2006. "Neutral or Fair?: Actuarial Concepts and Pension-System Design," OECD Social, Employment and Migration Working Papers 40, OECD Publishing.
    3. Van Vliet, Olaf & Been, Jim & Caminada, Koen & Goudswaard, Kees, 2011. "Pension reform and income inequality among the elderly in 15 European countries," MPRA Paper 32940, University Library of Munich, Germany.
    4. Piotr Lewandowski & Kamil Stronski & Roma Keister, 2015. "Labour market segmentation and pensions in the Polish defined-contribution scheme," IBS Working Papers 9/2015, Instytut Badan Strukturalnych.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    pension benefits; inequality; replacement rates; microsimulation;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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