Financial and redistributive impact of reforming the old-age pension system in Belgium

Marjan Maes

No 2008040, Discussion Papers (ECON - Département des Sciences Economiques) from Université catholique de Louvain, Département des Sciences Economiques

Abstract: The effects of three reforms of the Belgian old-age pension system were examined on retirement behaviour, government budget and income distribution of the old-age retired. On the basis of a large administrative micro-dataset used to estimate and simulate a discrete-time hazard model we found that reforms of the old-age pension system that penalize early retirement, and in particularly penalize early retirement of the rich more than the poor, are not only the ones that enhance the financial sustainability of the system at most but at the same time lead to the strongest decrease of income ineduality and relative poverty among the old-age retired. On the contrary, reforms that compensate retirement beyond the age of eligibility like the “pension bonus” recently implemented in Belgium lead to budget deficits and at the same time to a higher income ineduality among the old-age retired. Finally, it was shown that the impact of reforming the old-age pension system may be limited by individuals that have the prospect of receiving occupational pension benefits, among others because in Belgium these are subject to an extremely generous fiscal treatment

Keywords: early retirement; retirement incentives; pension reforms; hazard model; micro-simulation (search for similar items in EconPapers)
JEL-codes: C35 H23 J26 (search for similar items in EconPapers)
Pages: 47
Date: 2008-12-01
New Economics Papers: this item is included in nep-age and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvec:2008040

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