A simulation of social pensions in Europe

Vandeninden, Frieda (2012). A simulation of social pensions in Europe. UNU-MERIT.

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  • Author Vandeninden, Frieda
    Title A simulation of social pensions in Europe
    Publication Date 2012
    Publisher UNU-MERIT
    Abstract The aim of this paper is to evaluate the impact in terms of poverty and cost of the introduction of social (or non-contributory) pensions in Europe. We use data from the household survey EU-SILC and focus on 17 countries. We simulate - in a static framework - the introduction of two social pension schemes: universal and means tested social pensions. We see that the old-age poverty would substantially decrease (average poverty rate goes from 19.7 to 2.5 per cent with the universal scheme) but not totally, even though the level of the universal pension is set up to the poverty line. The impact on poverty with the means tested social pension is quite similar (though always smaller) than the one with the universal pension, since most elderly have few other income sources than pensions. On the opposite, it costs less. In fact, the means test reduces substantially the number of entitled elderly while the universal pension leads to a 'leakage' to non-poor elderly.
    Keyword Old age poverty
    Pension systems
    Social pensions
    JEL D310
    D190
    H55
    I380
    Copyright Holder UNU-MERIT
    Copyright Year 2012
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    Created: Wed, 11 Dec 2013, 16:14:42 JST