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
Date Written: February 21, 2018
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: Suggested Citation