La méthode Daisugi: Conséquences de réformes graduelles des pensions selon l’âge

Arno Baurin () and Jean Hindriks
Additional contact information
Arno Baurin: Université catholique de Louvain, LIDAM/IRES, Belgium

No 3227, LIDAM Reprints CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Belgium faces rapidly growing pension costs under the double effect of an increasing number of retirees and an increasing average pension (Noria effect of the pension). In this paper, we analyze how to control this growing pension cost in the future, using Belgian data on population and employment projections, so as to balance the budget in the long run. We consider immediate but gradual pension reforms that preserve past pension claims. The reforms can take two forms: adjusting the accrual rate (the rate at which pension claims are built-up during the career) or the indexation rate (the rate at which accrued pension claims are linked to nominal wage growth). As a first-order approach, we compare the (actuarial) prospective consequences of such gradual policies for all the cohorts alive today. We show that 80% of the voting population today prefers the accrual to the indexation reform, with the dramatic implication that the youngest half of the population would bear 85% of the total adjustment cost (compared to 65% under the indexation reform). Even worse, if we delay the accrual reform until 2030, the youngest half of the population today would bear 95% of the adjustment cost. The indexation reform provides a better generational balance because the phasing in over time has a larger base and, thus, reform cost can be smaller per capita. Two other interesting implications are that the indexation reform has a quicker effect on the growth of pension cost, and that all the new retirees would be better off with the indexation reform than with the accrual reform.

Pages: 5
Date: 2023-05-31
Note: In: Forum financier : revue bancaire et financière, 2023, n° 1, p. 9-13
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cor:louvrp:3227

Access Statistics for this paper

More papers in LIDAM Reprints CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Alain GILLIS ().