PROJECTING A LIFE-CYCLE INCOME - A SIMULATION MODEL FOR THE SLOVAK PENSION BENEFIT STATEMENT

Jan Sebo, Daniela Dankova () and Ivan Kralik ()
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Daniela Dankova: Faculty of Economics, Matej Bel University in Banska Bystrica
Ivan Kralik: Faculty of Economics, Matej Bel University in Banska Bystrica

OLSZTYN ECONOMIC JOURNAL, 2020, vol. 15, issue 4, 271-284

Abstract: The introduction of a regulation requiring pension asset managers to provide savers with an estimation of pension benefits opened a wide range of scientific questions on the projection methods and estimation of input parameters. One of them is the estimation of life-cycle income for calculating expected contributions and the estimation of the benefit ratio at the moment of retirement. We present an estimation of life-cycle income functions for various age and educational cohorts influenced by temporary labor market shocks. By employing the resampling simulation method for incorporating macroeconomic shocks, we have shown that using longitudinal data on the income process from a large closed economy could bring valid results for a country with a small open economy as well where the longitudinal data on income processes of individuals are unavailable. Our findings could serve a practical use when pension or other social benefits tied to individual income should be modelled.

Keywords: microsimulation; pension benefits; life-cycle income; labor market shocks (search for similar items in EconPapers)
JEL-codes: C53 H55 J31 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ole:journl:v:15:y:2020:i:4:p:271-284

DOI: 10.31648/oej.6380

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