scholarly journals Closing the gender gap in pensions: A microsimulation analysis of the Norwegian NDC pension system

2018 ◽  
Vol 29 (1) ◽  
pp. 130-143 ◽  
Author(s):  
Elin Halvorsen ◽  
Axel West Pedersen
Keyword(s):  
Gender Gap ◽  
Economies Of Scale ◽  
Pension System ◽  
Personal Income ◽  
Defined Contribution ◽  
Pension Income ◽  
System A ◽  
Actuarial Fairness ◽  
Annual Earnings ◽  
Pension Benefits

In this article, we use an advanced microsimulation model to study the distributional effects of the reformed Norwegian pension system with a particular focus on gender equality. The reformed Norwegian system is based on the notional defined contribution (NDC)-formula with fixed contribution/accrual rates over the active life-phase and with accumulated pension wealth being transformed into an annuity upon retirement. A number of redistributive components are built into the system: a unisex annuity divisor, a ceiling on annual earnings, generous child credits, a possibility for widows/widowers to inherit pension rights from a deceased spouse, a targeted guarantee pensions with higher benefit rates to single pensioners compared to married/cohabitating pensioners, and finally a tax system that is particularly progressive in its treatment of pensioners and pension income. Taking complete actuarial fairness as the point of departure, we conduct a stepwise analysis to investigate how these different components of the National Insurance pension system impact on the gender gap in pensions and on general (Gini) inequality in the distribution of pension income within a cohort of pensioners. Our analysis concentrates on one birth cohort – individuals born in 1963 – and we study three different outcomes: the distribution of annual pensions early in retirement (at age 70), the distribution of the total sum of pension benefits received over retirement, and the distribution of the average annual pension benefits received over the retirement phase. In addition, we look at three alternative income concepts. These are personal income, equivalised household income, and finally an original income concept developed for this study: personal income adjusted for the economies of scale enjoyed by couple households.

scholarly journals The transition to NDC in Italy: assessing distributive and financial effects

2021 ◽  
pp. 1-16
Author(s):  
Carlo Mazzaferro
Keyword(s):  
Net Present Value ◽  
Pension System ◽  
Pension Scheme ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Ratio Distribution ◽  
Actuarial Fairness ◽  
Notional Defined Contribution ◽  
High Level ◽  
Pension Benefits

Abstract Moving from a Defined Benefit (DB) to a Notional Defined Contribution (NDC) pension formula creates significant re-distributive effects. We estimate the amount and the intensity of these effects in the case of the Italian transition to NDC, which began in 1995. Based on administrative data of the main Italian pension scheme (FPLD), we study the evolution of yearly inequality within old-age pension benefits. Furthermore, we study the adequacy and the actuarial fairness of the pension system, by estimating the replacement rates and the Net Present Value Ratio distribution for workers who retired in the period 1996–2019. Our results show that the very generous interpretation of acquired rights determined by the 1995 reform has contributed to maintaining a high level of adequacy and a significant level of intergenerational imbalance. The financial costs of this imbalance are estimated and its extent is significant.

Social security, income inequality and growth

2011 ◽  
Vol 11 (1) ◽  
pp. 53-70 ◽  
Author(s):  
GILLES LE GARREC
Keyword(s):  
Economic Growth ◽  
Income Inequality ◽  
Low Income ◽  
Pension System ◽  
Industrial Countries ◽  
Lifetime Income ◽  
Actuarial Fairness ◽  
Retirement Systems ◽  
Pension Benefits ◽  
Shed Light

AbstractIn most industrial countries, public pension systems redistribute from workers to retired people, not from high-income to low-income earners. They are close actuarial fairness. However, they are not all equivalent. In particular, some pension benefits are linked to full lifetime average earnings, while others are only linked to partial earnings history. In the latter case, we then show in this article that an actuarially fair pay-as-you-go pension system can both reduce lifetime income inequality and enhance economic growth. We also shed light on the dilemma between inequality and economic growth in retirement systems: greater progressivity results in less lifetime inequlity but also less growth.

scholarly journals How Does Mortality Contribute to Lifetime Pension Inequality? Evidence From Five Decades of Swedish Taxation Data

2021 ◽  
Author(s):  
Jiaxin Shi ◽  
Martin Kolk
Keyword(s):  
Pension System ◽  
Socioeconomic Groups ◽  
Income Transfers ◽  
Pension Income ◽  
System P ◽  
Pension Benefits ◽  
Inequalities In Mortality ◽  
Pension Payments ◽  
Total Inequality ◽  
Taxation Data

As with many social transfer schemes, pension systems around the world are often progressive: individuals with lower incomes receive a higher percentage of their income as a subsequent pension. On the other hand, it is well known that those with lower earnings have higher mortality and thus accumulate fewer years of pension income. These opposite factors, therefore, both contribute to the progressiveness of a given pension system. Thus far, empirical research efforts to disentangle the effects of mortality inequality on lifetime pension income have been scarce. To close this gap, we use Swedish taxation data linked with death registers from 1970 to 2018 to study how education and pre-retirement earnings relate to lifetime pension income from age 60 onwards, as well as how inequalities in mortality between groups contribute to overall inequalities in lifetime pension income. The results show that both a progressive replacement structure and mortality differentials contribute to the overall distribution of life-course pension payments. A substantial proportion of the total inequality in lifetime pensions can be attributed to the fact that socially advantaged groups live longer, and this is particularly true for men. Mortality differences can explain up to 28% of the lifetime pension benefits between socioeconomic groups. We conclude that inequalities in mortality play an important part in determining the overall degree of between-group income transfers in a pension system.

scholarly journals ENDOGENOUS DEMOGRAPHIC CHANGE, RETIREMENT, AND SOCIAL SECURITY

2019 ◽  
pp. 1-23
Author(s):  
Giam Pietro Cipriani ◽  
Tamara Fioroni
Keyword(s):  
Social Security ◽  
Demographic Change ◽  
Pension System ◽  
Negative Impact ◽  
Positive Impact ◽  
Physical Capital ◽  
Mandatory Retirement ◽  
Defined Contribution ◽  
Tax Rate ◽  
Pension Benefits

In this paper, we analyze the effects of demographic change on a pay-as-you-go (PAYG) pension system, financed with a defined contribution scheme. In particular, we examine the relationship between retirement, fertility, and pensions in a three-period overlapping generations model. We focus on both the case of mandatory retirement and the case where the retirement age is freely chosen. In the case of mandatory retirement, increasing longevity has an unambiguously negative impact on fertility and pension payouts and a positive effect on the level of physical capital in the steady state. On the other hand, when agents choose the time of retirement, an increase in life expectancy positively affects physical capital only when the tax rate is sufficiently low and can have a positive impact on pension benefits, because agents may find it optimal to retire later and to decrease fertility less. Finally, the effects of the social security tax on capital per worker are negative with mandatory retirement; however, they could be positive in the optimal retirement case.

scholarly journals Mismeasurement of pensions before and after retirement: the mystery of the disappearing pensions with implications for the importance of Social Security as a source of retirement support

2013 ◽  
Vol 13 (1) ◽  
pp. 1-26 ◽  
Author(s):  
ALAN L. GUSTMAN ◽  
THOMAS L. STEINMEIER ◽  
NAHID TABATABAI
Keyword(s):  
Social Security ◽  
Pension Plans ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Bottom Line ◽  
Pension Income ◽  
Before And After ◽  
Social Security Wealth ◽  
Pension Benefits ◽  
Pension Wealth

AbstractA review of the literature suggests that when pension values are measured by the wealth equivalent of promised defined benefit pension benefits and defined contribution balances for those approaching retirement, pensions account for more support in retirement than is suggested when their contribution is measured by incomes received directly from pension plans by those who have already retired. Estimates from the Health and Retirement Study for respondents in their early fifties suggest that pension wealth is about 82% as valuable as Social Security wealth. In data from the Current Population Survey (CPS), for members of the same cohort, measured when they are 65–69, pension incomes are about 58% as valuable as incomes from Social Security. Our empirical analysis uses data from the HRS to examine the reasons for these differences in the contributions of pensions as measured in income and wealth data. Key factors accounting for these differences include: a difference in methodology between surveys affecting what is included in pension income; some pension wealth ‘disappears’ at retirement because respondents change their pension into other forms that are not counted as pension income; and the form of annuitization may influence the measure of pension income. A series of caveats notwithstanding, the bottom line is that CPS data on pension incomes received in retirement understates the full contribution pensions make to supporting retirees.

scholarly journals A woman’s cause? Popular attitudes towards pension credits for childcare in Norway

2019 ◽  
Vol 21 (3) ◽  
pp. 241-261
Author(s):  
Sigtona Halrynjo ◽  
Ragni Hege Kitterød ◽  
Axel West Pedersen
Keyword(s):  
Gender Gap ◽  
Pension System ◽  
Economic Status ◽  
Division Of Labour ◽  
Highly Educated ◽  
Pension Income ◽  
Political Debates ◽  
Positive Attitudes ◽  
Working Age ◽  
Work Family

In many countries – including Norway – concerns about the persistent gender gap in pensions have led to the introduction of child credits that compensate mothers for losing accrued pension rights while they care for small children. In political debates child credits are typically framed as being unequivocally women-friendly. But, although they help to reduce the gender gap in pension income, they tend to discourage mothers’ paid work and favour couples with a gendered division of paid and unpaid work. This article uses survey data to investigate the extent to which the working age population in Norway supports the idea that parents (mothers) of pre-school children with low earnings should be compensated by the pension system. We examine whether the pattern of support is consistently gendered or whether there are internal cleavages among men and women according to socio-economic status and work-family adaptation. We find that, although both genders express positive attitudes, women are on average more inclined to support child credits than men, but with strong internal divisions. While less-educated women in families with a traditional division of labour constitute the most supportive group, highly-educated women in gender-equal families are as sceptical towards child credits as their male peers. Surprisingly, among both genders, we find that younger cohorts are as supportive as older cohorts.

Further Reform of China’s Pension System: A Realistic Alternative Option to Fully Funded Individual Accounts

2007 ◽  
Vol 6 (2) ◽  
pp. 112-135
Author(s):  
Wei Zhang
Keyword(s):  
Capital Market ◽  
Pension System ◽  
Defined Contribution ◽  
Management Skills ◽  
Pension Insurance ◽  
Individual Account ◽  
System A ◽  
Financial Difficulties ◽  
The Individual

China's newly established three-pillar pension system consists of: basic pension; fully funded individual account; and voluntary commercial pension insurance. The second component faces immense financial difficulties caused by transitional costs in the short term and demographic changes in the long term. In addition, the inefficiency of the current capital market and the lack of fund management skills mean that these financial problems are unlikely to be solved within the existing framework of the fully funded individual account. This paper suggests another option—changing the fully funded individual account to a notional defined contribution individual account that operates on a pay-as-you-go basis. This change will keep the advantages of the individual account and avoid the huge risks caused by China's immature capital market.

The Notional Defined Contribution Pension Scheme and the German ‘Point System’: A Comparison

2018 ◽  
Vol 19 (4) ◽  
pp. 365-382 ◽  
Author(s):  
Vera Gurtovaya ◽  
Sergio Nisticò
Keyword(s):  
Pension System ◽  
Pension Scheme ◽  
Point System ◽  
Defined Contribution ◽  
Rates Of Return ◽  
System A ◽  
Analytical Properties ◽  
Notional Defined Contribution

AbstractThis paper examines the analytical properties of the German ‘points-based’ pension system. These properties are compared with those of a canonical Notional Defined Contribution (NDC) pension scheme. The paper identifies the circumstances under which the German ‘points-based’ system would mimic a Swedish-type NDC scheme and verifies to what extent the German ‘points-based’ scheme ensures uniformity of individual rates of return for some hypothetical careers. Finally, the paper proposes a set of new possible adjustment rules able to increase similarity between the German point system and the NDC scheme.

Gender Inequalities: Sidelined in British Pension Policy

2006 ◽  
Author(s):  
Jay Ginn
Keyword(s):  
Gender Gap ◽  
Pension System ◽  
Later Life ◽  
The State ◽  
Gender Inequalities ◽  
Pension Policy ◽  
Private Pensions ◽  
Pension Income ◽  
Working Age ◽  
State Pension

According to the Pensions Commission in its first report, the state pension system in Britain is among the least generous in the developed world. This reflects the explicit aim of both Conservative and New Labour governments since 1980 to reduce the share of pensions provided by the state and increase that provided by the private sector. This policy has reinforced the gender gap in pensions. Despite recent acknowledgement by the government's pensions minister that women's pensions are ‘a national scandal’, there is no sign of a radical shift in policy which is needed to remedy that situation. This chapter outlines the gender gap in later life income, showing how private pensions shape gender inequality in different ways based on women's marital status. It also examines gender differences in working-age individuals' employment, earnings, and private (occupational or personal) pension scheme membership, focusing on the impact of motherhood on women's position. Moreover, it considers alternative ways of protecting the pension income of carers and assesses the Pensions Commission's 2005 proposals in terms of women's pension needs.

scholarly journals The Role of Pension Policies in Preventing Old-Age Exclusion

2021 ◽  
pp. 373-383
Author(s):  
Jim Ogg
Keyword(s):  
Financial Stability ◽  
Later Life ◽  
Financial Risks ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Political Systems ◽  
Pension Income ◽  
Social Risks ◽  
Pension Benefits ◽  
Defined Benefit Pensions

AbstractAccess to an adequate pension is fundamental to preventing exclusion. As populations age, modern economies have put into place pension reforms to safeguard financial stability. In Europe, raising the age of eligibility for pensions and increasing the length of time necessary in a working career to access a pension are among the main policy measures that are being adopted. In addition, pensions and life expectancy are increasingly linked mainly in the form of the replacement of defined benefit pensions, where financial risks were shared collectively and produced stable pension benefits, by defined contribution pensions which depend on the capacity of individuals to save and individualise the risk of investments in diverse pension schemes. This chapter presents the main mechanisms of reforms to pension systems and addresses the opportunities and constraints for reducing exclusion in later life. It focuses on policies that aim to safeguard adequate levels of pension income for individuals who are unable to extend their working life; policies that aim to reduce gender pay gaps and, in turn, gender pension gaps; reforms to survivor pensions; and the provision of pension safety nets for individuals who have not built up enough contributions to ensure an adequate income. These policies are examined in the context of new social risks which result from shifting political systems, rapid technological change, and economic uncertainties.

Sign in / Sign up

Export Citation Format

Share Document