Sustainability and Adequacy of the Spanish Pension System after the 2013 Reform: A Microsimulation Analysis

UB Economics Working Papers E18/372

46 Pages Posted: 14 Mar 2018

See all articles by Meritxell Solé

Meritxell Solé

University of Barcelona

Guadalupe Souto

Autonomous University of Barcelona

Concepcio Patxot

University of Barcelona - Department of Economic Theory

Date Written: February 21, 2018

Abstract

Concerns about the consequences of demographic ageing on the sustainability of the pension system has led to the adoption of reforms reducing pension expenditure. However, the impact of these reforms on pension adequacy is now coming under increasing scrutiny. Taking recent Spanish reform as an example, this paper analyses the extent to which fostering pension sustainability threatens pension adequacy. Using an extension of the DyPeS behavioural microsimulation model, results show that the introduction of mechanisms linking retirement pensions to the evolution of the social security budget balance has strong and negative effects on adequacy. The gains in sustainability are mainly driven by the significant fall in the benefit ratio (average pension to average wage), worsening the relative economic position of pensioners throughout forthcoming decades, reversing the past trend.

Keywords: Pension Adequacy, Behavioural Microsimulation, Pension System Reforms, Pension Sustainability, Spain

JEL Classification: H53, H68, H55

Suggested Citation

Solé, Meritxell and Souto, Guadalupe and Patxot Cardoner, Concepcio, Sustainability and Adequacy of the Spanish Pension System after the 2013 Reform: A Microsimulation Analysis (February 21, 2018). UB Economics Working Papers E18/372. Available at SSRN: https://ssrn.com/abstract=3138484 or http://dx.doi.org/10.2139/ssrn.3138484

Meritxell Solé (Contact Author)

University of Barcelona

Gran Via de les Corts Catalanes, 585
Barcelona, 08007
Spain

Guadalupe Souto

Autonomous University of Barcelona ( email )

Plaça Cívica
Cerdañola del Valles
Barcelona, Barcelona 08193
Spain

Concepcio Patxot Cardoner

University of Barcelona - Department of Economic Theory ( email )

Barcelona
Spain

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