The automatic adjustment of pension expenditures in Spain:an evaluation of the 2013 pension reform

Alfonso R. Sánchez
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Alfonso R. Sánchez: Universidad Pablo de Olavide de Sevilla

No 1420, Working Papers from Banco de España

Abstract: This paper simulates the future performance of the Spanish pension system using a large OLG model. We compare the system in place after the 2011 pension reform to that emerging after the latest (2013) institutional changes. In particular, we explore the workings of the new indexing mechanism, linking pension payments to life expectancy and to the system’s aggregate flows of income and expenditure. We consider several alternative eco-demographic environments in our analysis and assess the welfare consequences for the different cohorts affected. Overall, the new automatic adjusting mechanism is broadly successful in its goal of stabilising the financial condition of the system. But the welfare costs imposed on some cohorts (e g. young workers at the beginning of the reform) is very heavy.

Keywords: pension reform; automatic adjustment mechanism; population aging; Spain (search for similar items in EconPapers)
JEL-codes: D58 H55 J11 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2014-07
New Economics Papers: this item is included in nep-age and nep-cmp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1420

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