Research Paper Social Situation Observatory Research Notes 1/2008
The effect of minimum pension schemes and recent reforms to them on the financial well-being of older people
01 Oct 2008
Comparing the effects of minimum pension schemes on incomes and poverty rates in old age in different countries gives rise to a number of conceptual problems, primarily because the means used to support incomes of those in retirement differ.
Public pensions account for the greater part of the income of those aged 65 and older in all EU countries. In countries with significant flat-rate schemes and modest second-tier pensions (Denmark, Sweden, the UK, Ireland and the Netherlands), they are distributed more or less equally across income groups, while they favour higher income groups in countries where pensions are predominantly earnings related (Austria, France, Germany and the south European countries).
According to simulations of the EURMOD microsimulation model, the minimum pension schemes considered here are estimated to reduce the risk of poverty, as conventionally measured, among people aged 65 and over by amounts ranging from 56 percentage points in Denmark, and 27 percentage points in the Netherlands to 2 percentage points in Austria and France and not at all in Germany, Portugal and Sweden
Recently introduced minimum pension schemes or reforms in existing systems in four EU countries selected for study are estimated to have reduced the risk of poverty of those aged 65 and over by 14 percentage points in Portugal 10 percentage points in Denmark and 2 percentage points in the UK but to have had no effect on the risk in Hungary.
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