scholarly journals Retirement Age: One size does not fit all

2020 ◽  
Vol 6 (2) ◽  
pp. 119-147
Author(s):  
Margarida Rego ◽  
Keyword(s):  
Early Retirement ◽  
Pension System ◽  
European Population ◽  
Retirement Age ◽  
Age Dependency ◽  
Policy Makers ◽  
Socioeconomic Groups ◽  
Health Aging ◽  
Age Dependency Ratio ◽  
Number Of Individuals

The European population is aging and, by 2050, Portugal will face a most alarming scenario, with an old-age dependency ratio — i.e. the number of individuals aged 65 or older as a share of the active age population — above 65%, almost double the figure for 2016. Portugal has already undertaken measures to improve the financial resilience of the pension system, but still lacks a better understanding of its social sustainability. We resort to the Survey of Health, Aging and Retirement in Europe (SHARE) to study individual heterogeneity on pension preferences and find that poor health and unemployment are, together with age and the length of the contributory career, key elements to understand early retirement, while late retirement is associated with higher income. Identifying socioeconomic groups with incentives to deviate from the statutory retirement age is crucial to policy makers currently debating the retirement age in Portugal.

scholarly journals Actuarial deductions for early retirement

2021 ◽  
pp. 1-27
Author(s):  
Markus Knell
Keyword(s):  
Early Retirement ◽  
Pension System ◽  
Budget Constraint ◽  
Retirement Age ◽  
Single Individual ◽  
Internal Rate Of Return ◽  
Market Interest Rate ◽  
Long Run ◽  
Retirement Behavior ◽  
The Right

Abstract This paper studies how the rates of deduction for early retirement have to be determined in pay-as-you-go (PAYG) systems in order to keep their budget stable. The derivation of these deductions requires the use of a multiperiod intertemporal budget constraint that involves assumptions about the retirement behavior of past, present, and future cohorts. In general, it is not possible to calculate budget-neutral deductions from the budget constraint of a single individual who retires before the target retirement age—an approach that dominates the related literature. Only for specific cases one can use this second approach but then one has to adjust the discount rate to the assumption about collective retirement. If there is only one deviating individual, then the right choice is the market interest rate while for a stationary retirement distribution it is the internal rate of return of the PAYG system. In this case, the necessary deductions are lower than under the standard approach. This is also true for retirement ages that fluctuate randomly around a stationary distribution. Various long-run developments (e.g., increases in life expectancy or permanent changes in the average retirement age) might cause challenges for the sustainability of the pension system. These developments, however, can only be dealt with by adequate adjustments to the basic pension formulas and not by the use of deduction rates.

scholarly journals Demographics, Labour Market, and Pension Sustainability in Hungary

2020 ◽  
Vol 42 (2) ◽  
pp. 146-171
Author(s):  
András Olivér Németh ◽  
Petra Németh ◽  
Péter Vékás
Keyword(s):  
Labour Market ◽  
Pension System ◽  
The Elderly ◽  
Retirement Age ◽  
Baseline Scenario ◽  
Dependency Ratio ◽  
Recent Developments ◽  
Market Trends ◽  
Employment Rates ◽  
Age Dependency Ratio

The sustainability of an unfunded pension system depends highly on demographic and labour market trends, i.e. how fertility, mortality, and employment rates change. In this paper we provide a brief summary of recent developments in these fields in Hungary and draw up a picture of the current situation. Then, we forecast the path of the economic old-age dependency ratio, i.e. the ratio of the elderly and employed populations. We make different alternative assumptions about fertility, mortality, and employment rates. According to our baseline scenario the dependency ratio is expected to rise from 40.6% to 77% by 2050. Such a sharp increase makes policy intervention inevitable. Based on our sensitivity analysis, the only viable remedy is increasing the retirement age.

Employment and substitution effects of raising the statutory retirement age in France

2019 ◽  
Vol 19 (3) ◽  
pp. 293-308 ◽  
Author(s):  
Simon Rabaté ◽  
Julie Rochut
Keyword(s):  
Pension System ◽  
Disability Insurance ◽  
Administrative Database ◽  
Substitution Effects ◽  
Retirement Age ◽  
Short Term ◽  
Policy Makers ◽  
Pension Systems ◽  
Short Term Evaluation ◽  
Term Evaluation

AbstractIncreasing the minimum retirement age is a widespread option chosen by policy makers to reduce spending in financially constrained public pension systems. Yet, the effectiveness of such a reform strongly depends on the ability of individuals to postpone their withdrawal from the labor force. In this paper, we study the immediate impact of the 2010 reform of the French pension system by carrying out a short-term evaluation on the increase of the statutory eligibility age from 60 to 61. We use a differences-in-differences methodology, comparing the trajectories from work to retirement for succeeding generations facing a different statutory age. Using a detailed social security administrative database, we provide a global assessment of the effects of the reform, accounting for the potential substitution effects from old-age insurance toward unemployment, sickness or disability insurance schemes. Our findings suggest that despite a sizable effect on the employment rate, the reform also strongly increased unemployment and disability rates.

scholarly journals On the Fairness of Early-Retirement Provisions

2010 ◽  
Vol 11 (1) ◽  
pp. 60-77 ◽  
Author(s):  
Friedrich Breyer ◽  
Stefan Hupfeld
Keyword(s):  
Discount Rate ◽  
Early Retirement ◽  
Pension System ◽  
Retirement Age ◽  
Annual Income ◽  
The Public ◽  
Public Pension System ◽  
Retirement Benefit ◽  
German System ◽  
Crucial Parameter

Abstract A crucial parameter for increasing the retirement age is the early retirement discount of the public pension system. Critics of the present German system argue that the downward adjustment of the pension for early retirees is too small compared with a ‘fair’ system and thus encourages early retirement. We discuss several notions of ‘fairness’ of early-retirement provisions and propose a concept called ‘distributive neutrality’, which states that the ratio between total benefits and total contributions should not depend systematically on the individual’s ability. By applying this concept to the German retirement benefit formula and taking empirically estimated relationships between annual income (as a proxy for ability), life expectancy and retirement age into account, we show that at the present discount rate of 3.6% per year there is redistribution from low to high earners, which, surprisingly, could be attenuated by raising the discount rate.

scholarly journals Fiscal Impacts of Demographic Transition in Pakistan

2021 ◽  
Vol 7 (1) ◽  
pp. 37-50
Author(s):  
Taqi Raza ◽  
Nabila Asghar ◽  
Farhat Rasul
Keyword(s):  
Demographic Transition ◽  
Pension System ◽  
Labour Force ◽  
Output Growth ◽  
Population Projections ◽  
World Population ◽  
Age Dependency ◽  
Fiscal Impacts ◽  
Age Dependency Ratio ◽  
The Impact

This study has examined the fiscal impacts of the demographic transition. Declining fertility rate and increasing life expectancy rate are expected to cause ageing in Pakistan. The population projections of United Nation’s World Population Prospects were used, for projecting the labour force, which uses different scenarios to project population namely low variant, medium variant and high variant scenario. The study found that projected labour force is expected to decline under the medium variant scenario. The study examined the impact of expected decline in labour force on output growth of Pakistan using growth accounting technique, and found that under medium variant scenario, Pakistan is expected to face a loss of 4% of GDP at the end of this century. On the expenditure side, this study attempted to measure the impact of demographic transition on pension expenditures. Due to the increase in the proportion of the dependent population pension expenditures are expected to rise from 1.2% of GDP in 2015 to 3.5% of GDP by the end of the century. Due to the increase in old-age dependency ratio and hike in pension expenditures of Pakistan pay-as-you-go pension system is expected to become fiscally unsustainable as fewer workers would be bearing the burden of aged population. This fact advocates transition from pay-as-you-go pension system to fully funded pension system.

scholarly journals Actuarial Neutrality and Financial Incentives for Early Retirement in the Austrian Pension System

2019 ◽  
Vol 10 (1) ◽  
pp. 1-22
Author(s):  
Michael Christl ◽  
Dénes Kucsera
Keyword(s):  
Financial Incentives ◽  
Early Retirement ◽  
Pension System ◽  
Financial Burden ◽  
Retirement Age ◽  
Tax System ◽  
The Individual

Abstract This paper takes a closer look at the existing early retirement schemes in Austria and analyses whether early retirement imposes a financial burden on the pension system (actuarial neutrality). Additionally, we compute incentive-neutral deductions for early retirement. These deductions reflect the view of the individual, who faces option of retiring earlier or working another year. Incentive neutral deductions would imply that an individual is indifferent between both. Our results highlight substantial differences between both measures. While the current deduction rate of 5.1% in the Austrian age corridor is, on average, close to actuarial neutrality, it is lower than the incentive-neutral deductions. This indicates that there are financial incentives for early retirement, which may arise due to the Austrian tax system. Additionally, we show that both actuarial and incentive neutrality differ substantially across socio-economic characteristics, such as gender, wages and (early) retirement age.

A Policy Framework for European Personal Pensions?

2018 ◽  
Author(s):  
Mark Heemskerk ◽  
René Maatman ◽  
Bas Werker
Keyword(s):  
The Netherlands ◽  
Financial Markets ◽  
Pension System ◽  
Policy Framework ◽  
Age Dependency ◽  
Pension Systems ◽  
Pension Schemes ◽  
Age Dependency Ratio ◽  
World Ranking ◽  
The Eu

Pensions in the EU are vulnerable to reduced economic growth, adverse developments in financial markets, and an increasing life expectancy. The increase of the old age dependency ratio contributes to concerns about the sustainability of pension systems. Nonetheless, the pension system in the Netherlands is one of the most sustainable in the world, ranking second in the Mercer Global Pension Index. The Dutch pension sector manages a significant EUR 1400 billion in assets for pensions that are primarily funded through legally compulsory schemes related to employment pension schemes. This chapter examines whether the development of a personal pension system in Europe and in the Netherlands coincide, and if the Dutch system can contribute to a policy framework for European personal pensions. It then considers the reasons why a European market for personal pensions has been proposed.

The effect of retirement on the health of elderly people: evidence from China

2021 ◽  
pp. 1-26
Author(s):  
Zengwen Wang ◽  
Yaofeng Chen ◽  
Yucheng Chen
Keyword(s):  
Elderly People ◽  
Pension System ◽  
Health Indicators ◽  
Fuzzy Regression ◽  
Retirement Age ◽  
Policy Makers ◽  
Before And After ◽  
Fuzzy Regression Discontinuity Design ◽  
Evidence For Policy ◽  
Important Evidence

Abstract The low retirement age has imposed a heavy economic burden on the pension system in China, leading to an ongoing debate about raising the retirement age. To understand the potential costs of raising the retirement age, we need to consider the health effects of retirement policies. Using the China Health and Retirement Longitudinal Study (CHARLS) from 2011 to 2015, this study employs the statutory retirement age as the exogenous variable of retirement and applies a fuzzy regression discontinuity design (RDD) to examine the effect of retirement on the health of Chinese elderly people. We find that retirement has a non-significant effect on health with respect to a series of health indicators, different bandwidths of RDD and sub-sample groups. The finding is also robust across different retirement definitions and retirement ages. This result may be attributed to the minimal changes in income and lifestyles before and after retirement. Moreover, the findings of this study provide important evidence for policy makers to increase retirement ages in China.

scholarly journals Institutional, Economic, and Socio-Economic Determinants of the Entrepreneurial Activity of Nations

2021 ◽  
Vol 11 (1) ◽  
pp. 26
Author(s):  
João Leitão ◽  
João Capucho
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Entrepreneurial Activity ◽  
Dependency Ratio ◽  
Age Dependency ◽  
Consumption Expenditure ◽  
Economic Determinants ◽  
Institutional Economic ◽  
Life Expectancy At Birth ◽  
Age Dependency Ratio

This empirical study analyses the effects of institutional, economic, and socio-economic determinants on total entrepreneurial activity in the contexts of developed and developing countries. It fills a gap in the literature, regarding the lack of empirical studies about the relationships among entrepreneurial activity, corruption, commercial freedom, economic growth, innovativeness, inward foreign direct investment, unemployment, households, and non-profit institutions serving households (NPISHs)’ final consumption expenditure, age dependency ratio, education index, and life expectancy at birth. The empirical application uses annual panel data for the 2003–2018 period, with a total sample of 21 countries, analysed in a two-stage empirical application, including preliminary analysis and a quantile regression model. New empirical evidence is provided, revealing a significantly positive role played by commercial freedom, innovativeness, inward foreign direct investment, households, and NPISHs’ final consumption expenditure and education on entrepreneurial activity. Corruption, unemployment, age dependency ratio, and life expectancy at birth have a significantly negative influence on entrepreneurial activity. In terms of implications, greater government control is recommended, in order to foster the quality of nations’ institutional environment. Additionally, suggested is the launch of new incentives to stimulate research and development activities aimed at registering international patents with a global impact, sourced from new ventures and transnational collaboration.

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