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Pension decrement rates across Europe – Are they too low?

Christoph Freudenberg, Natalie Laub and Tim Sutor

The Journal of the Economics of Ageing, 2018, vol. 12, issue C, 35-45

Abstract: In light of an ageing population, many European countries are aiming to increase the effective retirement age. Pension decrement rates play a key role in this as they determine the financial incentives for early retirement. In the following, a model is developed to calculate decrement rates which lead to financial neutrality of the decision on when to retire. The model is applied to 19 European countries. Results show that in most countries, official decrement rates tend to be lower than neutral rates. A sensitivity analysis and several alternative model variants underscore that, for the majority of countries, this result seems to be robust to the assumptions taken.

Keywords: Early retirement; Pension reform; International comparison; (Pension) Decrement rates; Actuarial adjustment (search for similar items in EconPapers)
JEL-codes: H31 H55 J14 (search for similar items in EconPapers)
Date: 2018
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The Journal of the Economics of Ageing is currently edited by D.E. Bloom, A. Sousa-Poza and U. Sunde

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Handle: RePEc:eee:joecag:v:12:y:2018:i:c:p:35-45