Policy Brief No. 6 - Age of Pension Eligibility, Life Expectancy, and Social Policy (original) (raw)
Related papers
Age of Pension Eligibility, Gains in Life Expectancy, and Social Policy
Canadian Public Policy, 2011
Canadians are living longer and retiring younger. When combined with the aging of the baby boom generation, that means that the "inactive" portion of the population is increasing and there are concerns about possibly large increases in the burden of support on those who are younger. We model the impact of continued future gains in life expectancy on the size of the population that receives public pension benefits. We pay special attention to possible increases in the age of eligibility and the pension contribution rate that would maintain the publicly financed component of the retirement income security system.
Ageing, Demographic Risks, and Pension Reform
2001
Ageing will increase pension expenditure and contribution rates. There is also increasing awareness that the risks connected to mortality, fertility, and migration are considerable. In pension reforms one must decide how these risks are to be shared between workers and pensioners, and also take into account that in the transition phases different cohorts may gain or lose. We discuss the risk-sharing and intergenerational distribution aspects of three pension policy measures that either have already been adopted or are being proposed in Sweden and Finland. Each of these methods, linking benefits to life expectancy, indexing benefits to the total wage bill, and using fertility-dependent prefunding, has its own advantages and weaknesses. Using a numerical OLG model, and realisations from stochastic population simulations, we demonstrate that these methods greatly enhance the sustainability of a pension system in unfavourable demographic outcomes but have practically no effects if the demographics remain stable. Thus the allocation of risks can be improved without fundamentally changing the systems.
2008
We investigate the impact of three public pension programs on the mortality rates of recipient age groups in Canada. The Old Age Pension (OAP), introduced in 1927 for Canadians over age 70, and Old Age Assistance (OAA), implemented in 1952 for Canadians aged 65-69, were means tested programs while Old Age Security (OAS), introduced in 1952 for Canadians over age 70, was a universal plan. Our data consist of age-specific mortality rates and pension information, by province, for the period 1921-1966. The three dimensional feature of this panel allows us to exploit variation in policy implementation dates across provinces, and changes in income and age group eligibility. We find that the implementation of all three pension programs resulted in statistically significant reductions in recipient age group mortality rates and that the effect of the federal universal OAS of 1952 was twice as large as either of the means tested plans. However, the number of lives extended with the universal OAS was small and the estimated cost per life extended large.
Ageing, retirement and pension reforms
The World Economy, 2003
I T is sometimes said that 'war is too serious a matter to be left to the generals', and it is tempting to paraphrase the saying by asking whether retirement is not also too important a question to be left to economists and politicians. This idea has come to me in recent months, and in response to two surprising changes in received opinion. Faced with difficult stock markets many advocates of funding and privatising pension systems have given up on their proposals-which once seemed so attractive. In the face also of a resurgence of unemployment, some newly converted supporters of raising the age of retirement have also been repossessed by old demons and once again believe-against all the evidencethat inactivity among the older generation contributes to an increase in economic activity among younger workers. These remarks are to remind that the design of a new pensions system as well as the reform of an existing system should not be influenced in their basic features by temporary shocks. Stock market fluctuations and changes in the labour market are all part of normal economic life and must therefore form an integral part of a robust and yet flexible system.
THE ECONOMIC IMPACT OF RISING THE RETIREMENT AGE: LESSONS FROM THE SEPTEMBER 1993 LAW
1992
In most developed countries, pension systems have been facing longer life spans and lower birth rates. Almost without exception, political decision makers have responded by increasing the legal retirement age (the age when workers are entitled to collect their full retirement pension); by increasing the contributions to the pension funds; and by restricting the access to early retirement. 1
Aging population and public pensions: theory and evidence
2011
Rapidly aging population in high-income countries has exerted additional pressure on the sustainability of public pension expenditure. We present a formal model of public pension expenditure under endogenous human capital, where the latter facilitates a substantial decrease in equilibrium fertility rate alongside the improvement in life expectancy. We demonstrate how higher life expectancy and human capital endowment facilitate the rise of net replacement rate. We provide and examine an empirical model of old-age expenditure in a panel of 33 countries in the period 1998–2008. Our results indicate that increases in total fertility rate and effective retirement age would reduce age-related expenditure substantially. While higher net replacement rate would alleviate the risk of old-age poverty, it would endanger long-term sustainability of public finance by imposing additional pressure on deficit and public debt.
Demographic Pressure on the Public Pension System
Informatica (slovenia) - INFORMATICASI, 2008
The combination of low fertility, decreasing mortality and the baby-boom generation entering retirement will dramatically increase the share of elderly people in Slovenia in future decades. Without further changes in the pension system this will bring about strong pressure on the public pension system. In the analysis we use a cohort-based model to project the share of public expenditure on pensions in gross domestic product. This model enables us to analyse the long-term effects of the forthcoming demographic changes in connection with the current public pension system. The projected rise in pension expenditure will have to be mitigated at some point in the future and reducing pension benefits is one of the options.
The Economic Benefits of Working Longer and the Financing of Social Security in Canada
Although the population is living longer, the trend in Canada and most OECD countries is towards older workers to retire at an earlier age, which raises public policy challenges in the context of population aging. This paper evaluates the economic cost of earlier retirement, the benefits of working longer in Canada and the consequences for the financing of social security. The analysis is conducted using a computable overlapping generations model calibrated on the Canadian economy. The paper's key finding indicates that a gradual increase in the average effective retirement age from 61 in the early 2000s to 65 by 2014 could raise real per-capita GDP by more than 8% by 2030. This in turn would give room to reduce effective tax rates and could allow a 25% reduction in the contribution rate to Canada's Pension Plan.
12. Stasis amidst change: Canadian pension reform in an age of retrenchment
Ageing and Pension Reform around the World: Evidence from Eleven Countries, 2003
The ongoing debate on pension reform among policy-makers in East Asian, North American and Western European countries has been framed by a conventional discourse depicting a developing demographic time bomb as the elderly population grows in relation to the overall population (Béland and Waddan, 2000). Since the 1980s, these demographic fears as well as macroeconomic constraints related to economic globalization and regional integration have favoured the enactment of various pension reforms in East Asia, North America and ...