A Projection of Spanish Pension System under Demographic Uncertainty

Namkee Ahn (), Javier Alonso-Meseguer and Juan García López

No 2005-20, Working Papers from FEDEA

Abstract: The objective of this paper is to carry out a projection of the pension expenditures under demographic uncertainty in Spain. In order to obtain a stochastic pension expenditure projection, as well as the number of pensioners and the number of contributors, we use a stochastic population projection. Demographic situation with respect to the pension system in Spain shows a dramatic change during the first half of this century. It will be relatively favorable during the first two decades due to the increasing participation and employment rates as well as due to the relatively small civil war generations occupying dependent old ages while the baby boom generations staying in working ages. Starting from around 2030, however, the situation is completely reversed as the baby-boomers start to retire from the labor market while the working age population consists mostly of much smaller baby bust generations. The financial situation of Spanish pension system appears to be affected significantly by the above mentioned demographic situation. During the first few decades it will enjoy a small surplus. Most importantly, the deficit during the subsequent decades will be large and increasing over time. In 2050, the deficit will be higher than 6% of GDP by the probability of 0.90, and will be higher than 15% by the 0.10 probability. In the same year, the range of the debt (accumulated deficit) will be between 77% and 260% of GDP by the 80% confidence interval.

New Economics Papers: this item is included in nep-eec and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://documentos.fedea.net/pubs/dt/2005/dt-2005-20.pdf (application/pdf)

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:fda:fdaddt:2005-20

Access Statistics for this paper

More papers in Working Papers from FEDEA
Bibliographic data for series maintained by Carmen Arias ().