SlideShare a Scribd company logo

Vansonsbeek Presentation

•
J
jmvsonsbeek

This document summarizes a thesis consisting of four papers that use microsimulations to analyze the effects of aging-related policy measures in the Netherlands. The thesis examines the Dutch pension system, uses micro data on pension payments and entitlements, and models retirement decisions to analyze the impacts of policy alternatives like abolishing partner allowances, raising the retirement age, and individualizing state pensions. The microsimulation model links demographic trends to retirement behavior and is useful for evaluating policy options to address the rising costs of aging on public finances.

1 of 26
Download to read offline
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
Microsimulations on the effects of ageing-related policy measuresJan-Maarten van Sonsbeek (VU University / Ministry of Social Affairs and Employment)
ContextThesis consisting of four papers:A Microsimulation Analysis of the 2006 Regime Change in the Dutch Disability SchemeMicrosimulations on the Effects of Ageing-related Policy Measures:Technical paper on the SADNAP modelPolicy paperRetirement Window / Delayed Retirement Credit2Microsimulations on the effects of ageing-related policy measures
ContentsBackground: Pension system, ageing in the NetherlandsData: Micro data on state pension payments and state and private pension entitlementsModel: Demographic with behavioural retirement decision component (option value)Results: Baseline and four policy alternatives3Microsimulations on the effects of ageing-related policy measures
System characteristics1st pillar (state) pension: PAYG, contributions (2/3) + taxes (1/3)Basic income level, no income/means tests2nd pillar (company) pension: Fully funded (final wage  career average)Aim: 70% final wage3rd pillar (individual) pension“4th pillar”: personal wealth (housing)Microsimulations on the effects of ageing-related policy measures - Background4
1st pillar state pensionFixed retirement age 65From 2010 retirement window 65 - 70Contributions partially earnings-relatedPensions not earnings-relatedsingles 70% MW (€ 12,700)couples 50% MW (€ 8,700)Addition: partner allowance (<65 yrs) <= 50% MWSubtraction: -2% for each year between 15 and 65 not lived in NLMicrosimulations on the effects of ageing-related policy measures - Background5
Ageing in the NetherlandsPopulation forecast (CBS, 2008)Nr. of 65+: 2.5 mln. (2009)  4.5 mln. (2040)Grey pressure: 25% (2009)  49% (2040)Life expectancy at 65: 19 yrs (2009)  21.5 yrs (2040)Sustainability gap projections (CPB)Estimate 2007: 2.2% GDPNew estimate early 2010 (before 2011 elections)Influence economic crisisMicrosimulations on the effects of ageing-related policy measures - Background6
Data sourcesMicro dataState pension payments (SVB, 2.6 mln. – 2006)State pension entitlements (CBS, 11.0 mln. – 2005)Private pension entitlements (CBS, 5.8 mln. – 2005)Macro dataPopulation forecast (CBS, 2009-2050)Household forecast (CBS, 2007-2050)Participation forecast (CPB, 2009-2050)Benefit forecast (SZW, 2009-2050)7Microsimulations on the effects of ageing-related policy measures - Data
Participation by Age8Microsimulations on the effects of ageing-related policy measures - Data
Wage and pension by age9Microsimulations on the effects of ageing-related policy measures - Data
Replacement rates by subgroup10Microsimulations on the effects of ageing-related policy measures - Data
The SADNAP ModelSAS-basedDemographic model: Births, Deaths, Immigration, EmigrationDifferentiation of mortality ratesHousehold formation (0/1)Participation (0/1)Behavioural model:Retirement decision from age 60 onwardsStock & Wise option value model11Microsimulations on the effects of ageing-related policy measures - Model
The demographic model12Microsimulations on the effects of ageing-related policy measures - Model
The simulated database13Microsimulations on the effects of ageing-related policy measures - Model
Option value modelIndividual heterogeneityLeisure preference (k) ~ U(1-3)Time preference (ρ) ~ U(0; 0-0.05; 0.05-0.1; 0.1-0.2; 0.2-1)Expected wage decrease (τ) ~ U(0-0.18)14Microsimulations on the effects of ageing-related policy measures - ModelOption value (Stock & Wise, 1990): Wage + Retirement
Peak value (Coile & Gruber, 1998): Retirement onlyBaseline scenario2006 macro forecast (€ 48.7 bln.)2006  2008 population forecast: + € 2.3 bln.Cost per person decrease: - € 1.9 bln.More immigrants (reduced state pensions)Rising labour participation of womenNo effect from ratio singles/couples2009 baseline estimate: € 49.1 bln.8.6% of GDP (but depends on growth assumption)15Microsimulations on the effects of ageing-related policy measures - Results
Differences in life expectancyMicrosimulations on the effects of ageing-related policy measures - Results16
Baseline redistributionMicrosimulations on the effects of ageing-related policy measures - Results17
Baseline retirement age pattern18Microsimulations on the effects of ageing-related policy measures - Results
Sustainability of public financeMain policy directions in case of unsustainabilityLet future generations pay the billIncrease government revenuesReduce government expensesIncrease labour participationConsiderationsBudgetary effectsRedistributive effectsParticipation effectsPolitical viability19Microsimulations on the effects of ageing-related policy measures - Results
Policy MeasuresAbolishment partner allowanceDecided 1996, in force 2015Raising retirement age 65  67“Decided” 2009, alternatives to be proposed by SECAbolishment tax exemption for pensionersProposed 2006 by most left-wing parties and SECIndividualization of state pensions: 50% for allProposed 1987, very controversial20Microsimulations on the effects of ageing-related policy measures - Results
Effect on government budget21Microsimulations on the effects of ageing-related policy measures - Results
Tax exemption of pensioners22Microsimulations on the effects of ageing-related policy measures - Results
Effect on retirement age23Microsimulations on the effects of ageing-related policy measures - Results
Effect on redistributionGeneric measure: Gini coefficientSpecific measure: Share of lifetime pension income24Microsimulations on the effects of ageing-related policy measures - Results
Overall assessment25Microsimulations on the effects of ageing-related policy measures - Results
ConclusionBaselineUpwards pressure from population forecastMitigated by decreasing cost per personPolicy alternativesAbolishment partner allowance “no-regret measure”Abolishment tax exemption and individualization state pensions have largest cost effectRaising retirement age best for labour participationMicrosimulation modelAdded value in policy evaluationLink with macro GE models important26

More Related Content

PPTX
Psychosocial aspects of ageing
Mental Health Center
 
PPT
Aging process
ST. JAMES COLLEGE
 
PPT
Aging powerpoint
JANETH O. BUHAWE/MOTI
 
PPT
Using Microsimulation for Policy Evaluation / Cathal O’Donoghue Teagasc Rural...
EUROsociAL II
 
PDF
Jussi Tervola, Susanna Mukkila, Katja Ilmarinen ja Satu Kapiainen: The effect...
THL
 
PDF
Knowledge Exchange Platform (KEP) Workshop 2 - Italy BES Indicators - Susan B...
StatsCommunications
 
PDF
Putting well being metrics into policy action, Susan Battles
StatsCommunications
 
PDF
Gender budgeting in OECD countries: Where do we stand? - Aline PENNISI, Italy
OECD Governance
 
Psychosocial aspects of ageing
Mental Health Center
 
Aging process
ST. JAMES COLLEGE
 
Aging powerpoint
JANETH O. BUHAWE/MOTI
 
Using Microsimulation for Policy Evaluation / Cathal O’Donoghue Teagasc Rural...
EUROsociAL II
 
Jussi Tervola, Susanna Mukkila, Katja Ilmarinen ja Satu Kapiainen: The effect...
THL
 
Knowledge Exchange Platform (KEP) Workshop 2 - Italy BES Indicators - Susan B...
StatsCommunications
 
Putting well being metrics into policy action, Susan Battles
StatsCommunications
 
Gender budgeting in OECD countries: Where do we stand? - Aline PENNISI, Italy
OECD Governance
 

Similar to Vansonsbeek Presentation (20)

PPTX
Policy, mirror, or metaphor? The political economy of ubi
Kelan tutkimus / Research at Kela
 
DOCX
CONGRESS OF THE UNITED STATESCONGRESSIONAL BUDGET OFFICE
AlleneMcclendon878
 
PDF
05.28.2013, REPORT, DEMOGRAPHIC DYNAMICS AND SOCIAL INSURANCE SYSTEM IN MONGO...
The Business Council of Mongolia
 
PPT
JSNA Summary Birmingham
Professor Jim McManus AFBPsS,FFPH,CSci, FRSB, CPsychol
 
PDF
Estimating the Budgetary Implications of Prevention Policies
Congressional Budget Office
 
PPTX
How to quantify gains from better health?
GRAPE
 
PDF
14 - Population projections revisited, part 3 (2015) (ENG)
InstitutoBBVAdePensiones
 
PDF
Distribution of Medicare Taxes and Spending by Lifetime Household Earnings
Congressional Budget Office
 
PDF
Employer Employee linked data in Italy availability and usage by institusions
Structuralpolicyanalysis
 
PDF
Welfare Populism And Welfare Chauvinism Bent Greve
fonguhkhoob
 
PPT
C:\Fakepath\Mams Demog Gtap 2009
guest512dfd4
 
PDF
Assessing Effects on the Federal Budget of Policies to Promote Health and Pre...
Congressional Budget Office
 
PPTX
When do donors matter? The politics of promoting social protection in sub-Sah...
EffectiveStates
 
PDF
Labor Markets Core Course 2013: Seguro popular
Health, Education, Social Protection and Labor World Bank
 
PDF
7th OECD World Forum on Well-being, Rome, Francesco CORTI
StatsCommunications
 
PPT
Yuri Kazepov
saintclem
 
PDF
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institution...
OECD_NAEC
 
PDF
Long-term care reform in Slovenia: financing perspective - Eva Zver, Slovenia
OECD Governance
 
PDF
Embedding Gender Budgeting - Aline PENNISI (Italy)
OECD Governance
 
PDF
Economic consequences of changing fertility. Insights from an OLG model
GRAPE
 
Policy, mirror, or metaphor? The political economy of ubi
Kelan tutkimus / Research at Kela
 
CONGRESS OF THE UNITED STATESCONGRESSIONAL BUDGET OFFICE
AlleneMcclendon878
 
05.28.2013, REPORT, DEMOGRAPHIC DYNAMICS AND SOCIAL INSURANCE SYSTEM IN MONGO...
The Business Council of Mongolia
 
JSNA Summary Birmingham
Professor Jim McManus AFBPsS,FFPH,CSci, FRSB, CPsychol
 
Estimating the Budgetary Implications of Prevention Policies
Congressional Budget Office
 
How to quantify gains from better health?
GRAPE
 
14 - Population projections revisited, part 3 (2015) (ENG)
InstitutoBBVAdePensiones
 
Distribution of Medicare Taxes and Spending by Lifetime Household Earnings
Congressional Budget Office
 
Employer Employee linked data in Italy availability and usage by institusions
Structuralpolicyanalysis
 
Welfare Populism And Welfare Chauvinism Bent Greve
fonguhkhoob
 
C:\Fakepath\Mams Demog Gtap 2009
guest512dfd4
 
Assessing Effects on the Federal Budget of Policies to Promote Health and Pre...
Congressional Budget Office
 
When do donors matter? The politics of promoting social protection in sub-Sah...
EffectiveStates
 
Labor Markets Core Course 2013: Seguro popular
Health, Education, Social Protection and Labor World Bank
 
7th OECD World Forum on Well-being, Rome, Francesco CORTI
StatsCommunications
 
Yuri Kazepov
saintclem
 
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institution...
OECD_NAEC
 
Long-term care reform in Slovenia: financing perspective - Eva Zver, Slovenia
OECD Governance
 
Embedding Gender Budgeting - Aline PENNISI (Italy)
OECD Governance
 
Economic consequences of changing fertility. Insights from an OLG model
GRAPE
 
Ad

Vansonsbeek Presentation

  • 1. Microsimulations on the effects of ageing-related policy measuresJan-Maarten van Sonsbeek (VU University / Ministry of Social Affairs and Employment)
  • 2. ContextThesis consisting of four papers:A Microsimulation Analysis of the 2006 Regime Change in the Dutch Disability SchemeMicrosimulations on the Effects of Ageing-related Policy Measures:Technical paper on the SADNAP modelPolicy paperRetirement Window / Delayed Retirement Credit2Microsimulations on the effects of ageing-related policy measures
  • 3. ContentsBackground: Pension system, ageing in the NetherlandsData: Micro data on state pension payments and state and private pension entitlementsModel: Demographic with behavioural retirement decision component (option value)Results: Baseline and four policy alternatives3Microsimulations on the effects of ageing-related policy measures
  • 4. System characteristics1st pillar (state) pension: PAYG, contributions (2/3) + taxes (1/3)Basic income level, no income/means tests2nd pillar (company) pension: Fully funded (final wage  career average)Aim: 70% final wage3rd pillar (individual) pension“4th pillar”: personal wealth (housing)Microsimulations on the effects of ageing-related policy measures - Background4
  • 5. 1st pillar state pensionFixed retirement age 65From 2010 retirement window 65 - 70Contributions partially earnings-relatedPensions not earnings-relatedsingles 70% MW (€ 12,700)couples 50% MW (€ 8,700)Addition: partner allowance (<65 yrs) <= 50% MWSubtraction: -2% for each year between 15 and 65 not lived in NLMicrosimulations on the effects of ageing-related policy measures - Background5
  • 6. Ageing in the NetherlandsPopulation forecast (CBS, 2008)Nr. of 65+: 2.5 mln. (2009)  4.5 mln. (2040)Grey pressure: 25% (2009)  49% (2040)Life expectancy at 65: 19 yrs (2009)  21.5 yrs (2040)Sustainability gap projections (CPB)Estimate 2007: 2.2% GDPNew estimate early 2010 (before 2011 elections)Influence economic crisisMicrosimulations on the effects of ageing-related policy measures - Background6
  • 7. Data sourcesMicro dataState pension payments (SVB, 2.6 mln. – 2006)State pension entitlements (CBS, 11.0 mln. – 2005)Private pension entitlements (CBS, 5.8 mln. – 2005)Macro dataPopulation forecast (CBS, 2009-2050)Household forecast (CBS, 2007-2050)Participation forecast (CPB, 2009-2050)Benefit forecast (SZW, 2009-2050)7Microsimulations on the effects of ageing-related policy measures - Data
  • 8. Participation by Age8Microsimulations on the effects of ageing-related policy measures - Data
  • 9. Wage and pension by age9Microsimulations on the effects of ageing-related policy measures - Data
  • 10. Replacement rates by subgroup10Microsimulations on the effects of ageing-related policy measures - Data
  • 11. The SADNAP ModelSAS-basedDemographic model: Births, Deaths, Immigration, EmigrationDifferentiation of mortality ratesHousehold formation (0/1)Participation (0/1)Behavioural model:Retirement decision from age 60 onwardsStock & Wise option value model11Microsimulations on the effects of ageing-related policy measures - Model
  • 12. The demographic model12Microsimulations on the effects of ageing-related policy measures - Model
  • 13. The simulated database13Microsimulations on the effects of ageing-related policy measures - Model
  • 14. Option value modelIndividual heterogeneityLeisure preference (k) ~ U(1-3)Time preference (ρ) ~ U(0; 0-0.05; 0.05-0.1; 0.1-0.2; 0.2-1)Expected wage decrease (τ) ~ U(0-0.18)14Microsimulations on the effects of ageing-related policy measures - ModelOption value (Stock & Wise, 1990): Wage + Retirement
  • 15. Peak value (Coile & Gruber, 1998): Retirement onlyBaseline scenario2006 macro forecast (€ 48.7 bln.)2006  2008 population forecast: + € 2.3 bln.Cost per person decrease: - € 1.9 bln.More immigrants (reduced state pensions)Rising labour participation of womenNo effect from ratio singles/couples2009 baseline estimate: € 49.1 bln.8.6% of GDP (but depends on growth assumption)15Microsimulations on the effects of ageing-related policy measures - Results
  • 16. Differences in life expectancyMicrosimulations on the effects of ageing-related policy measures - Results16
  • 17. Baseline redistributionMicrosimulations on the effects of ageing-related policy measures - Results17
  • 18. Baseline retirement age pattern18Microsimulations on the effects of ageing-related policy measures - Results
  • 19. Sustainability of public financeMain policy directions in case of unsustainabilityLet future generations pay the billIncrease government revenuesReduce government expensesIncrease labour participationConsiderationsBudgetary effectsRedistributive effectsParticipation effectsPolitical viability19Microsimulations on the effects of ageing-related policy measures - Results
  • 20. Policy MeasuresAbolishment partner allowanceDecided 1996, in force 2015Raising retirement age 65  67“Decided” 2009, alternatives to be proposed by SECAbolishment tax exemption for pensionersProposed 2006 by most left-wing parties and SECIndividualization of state pensions: 50% for allProposed 1987, very controversial20Microsimulations on the effects of ageing-related policy measures - Results
  • 21. Effect on government budget21Microsimulations on the effects of ageing-related policy measures - Results
  • 22. Tax exemption of pensioners22Microsimulations on the effects of ageing-related policy measures - Results
  • 23. Effect on retirement age23Microsimulations on the effects of ageing-related policy measures - Results
  • 24. Effect on redistributionGeneric measure: Gini coefficientSpecific measure: Share of lifetime pension income24Microsimulations on the effects of ageing-related policy measures - Results
  • 25. Overall assessment25Microsimulations on the effects of ageing-related policy measures - Results
  • 26. ConclusionBaselineUpwards pressure from population forecastMitigated by decreasing cost per personPolicy alternativesAbolishment partner allowance “no-regret measure”Abolishment tax exemption and individualization state pensions have largest cost effectRaising retirement age best for labour participationMicrosimulation modelAdded value in policy evaluationLink with macro GE models important26