Ageing society: a study on impact of living and working longer on pension income in Estonia, Finland, Hungary, the Netherlands and Poland

CASE released a paper about the impact of working and living longer on pension incomes in five European countries: Estonia, Finland, Hungary, the Netherlands and Poland. These five countries have rather different pension systems and differ markedly in their (planned) reforms due to increased life expectancy. Hungary, to take the most extreme example, has recently returned to a purely “pay as you go” (PAYG) system where pension income for the elderly is fully paid for by the current active population.  The country’s statutory retirement age will increase in the coming years, but it is left to future policymakers to decide how increases in life expectancies, that may be faster or slower than projected, will be dealt with. There are hardly any tax incentives for individuals to accumulate lifelong retirement income to provide an additional insurance against the financial risks of advanced age and to top off the first pillar’s pension income. In Finland and the Netherlands on the other hand, the statutory retirement age for basic (first pillar) pension income is linked to estimates of life expectancy and funded components in the pension system provide additional lifelong pension income. The macro longevity risk (the risk of increases in the average life expectancy) in these annuities is being shifted more and more to individuals.   

Read the study: http://www.case-research.eu/en/node/58878