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Sustainability and Adequacy of the Spanish Pension System after the 2013 Reform: A Microsimulation Analysis

Meritxell Solé (), Guadalupe Souto () and Concepció Patxot ()
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Meritxell Solé: Universitat de Barcelona
Guadalupe Souto: Universitat Autònoma de Barcelona

Hacienda Pública Española / Review of Public Economics, 2019, vol. 228, issue 1, 109-150

Abstract: Concerns about the consequences of demographic ageing on the sustainability of the pension system has led to the adoption of reforms reducing pension expenditure. However, the impact of these reforms on pension adequacy is now coming under increasing scrutiny. Taking recent Spanish reform as an example, this paper analyses the extent to which fostering pension sustainability threatens pension adequacy. Using an extension of the DyPeS behavioural microsimulation model, results show that the introduction of mechanisms linking retirement pensions to the evolution of the social security budget balance has strong and negative effects on adequacy. The gains in sustainability are mainly driven by the significant fall in the benefit ratio (average pension to average wage), worsening the relative eco¬nomic position of pensioners throughout forthcoming decades, reversing the past trend.

Keywords: Ageing; Pensions; Pension adequacy; Pension Reforms; Sustainability; Welfare State (search for similar items in EconPapers)
JEL-codes: H53 H55 I38 J11 J18 (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:hpe:journl:y:2019:v:228:i:1:p:109-150