The Impact of Life-Course Developments on Pensions in the NDC Systems in Poland, Italy and Sweden and Point System in Germany

41 Pages Posted: 25 Feb 2018

See all articles by Agnieszka Chłoń-Domińczak

Agnieszka Chłoń-Domińczak

Warsaw School of Economics (SGH)

Marek Góra

Warsaw School of Economics (SGH); IZA Institute of Labor Economics

Irena Kotowska

Warsaw School of Economics (SGH)

Iga Magda

Warsaw School of Economics (SGH)

Anna Ruzik-Sierdzińska

Warsaw School of Economics (SGH)

Pawel Strzelecki

National Bank of Poland; Warsaw School of Economics (SGH)

Date Written: February 2018

Abstract

Old-age pensions in the NDC systems reflect the accumulated lifetime labour income. Interrupted careers and differences in the employment rates, particularly between men and women will have a significant impact on pension incomes in NDC countries. In the paper, we compare the labour market developments in four countries: Germany, Italy, Poland, and Sweden. There are pronounced differences in the labour market participation in the four countries: high levels of employment in Germany and Sweden are in contrast with low levels of employment in Italy and Poland. In the latter two countries, there is also a large gender gap in the labour market participation and employment pathways.Lower employment rates and gender pay gaps, as well as country-specific employment paths are important causes of differences in expected pension levels, but there are also differences due to the design of pension system and demographic developments. Prolonging working lives and reducing gender gaps in employment and pay, particularly for those at risk of interrupted careers, is key to ensure decent old-age pensions in the future. We argue that the pension systems' design modifications that weaken the link between contribution and benefits would not solve the challenge of providing adequate old-age pensions to people with interrupted careers. On the contrary, it would make the pension systems less sustainable, while the problem would be more challenging in the future.

Keywords: NDC, old-age pensions, lifetime labour income, gender pay gap, interrupted carriers, sequence analysis, employment path

JEL Classification: D15, H55, J16, J26, J31

Suggested Citation

Chłoń-Domińczak, Agnieszka and Góra, Marek and Kotowska, Irena and Magda, Iga and Ruzik-Sierdzińska, Anna and Strzelecki, Pawel, The Impact of Life-Course Developments on Pensions in the NDC Systems in Poland, Italy and Sweden and Point System in Germany (February 2018). IZA Discussion Paper No. 11341. Available at SSRN: https://ssrn.com/abstract=3129285

Agnieszka Chłoń-Domińczak (Contact Author)

Warsaw School of Economics (SGH)

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

Marek Góra

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Irena Kotowska

Warsaw School of Economics (SGH)

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

Iga Magda

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

HOME PAGE: http://www.sgh.waw.pl/prywatne/im20431/kontakt/

Anna Ruzik-Sierdzińska

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

Pawel Strzelecki

National Bank of Poland

00-919 Warsaw
Poland

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

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