Impact on pension outcomes of life events: standard simulations from five European countries

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Dekkers, G., Van den Bosch, K., Barslund, M., Kirn,Tanja, Kump,Nataša , Liégeoise, P., Moreira, A., Stropnik, N., Thierbach, K., & Vergnate, V. (2020). Impact on pension outcomes of life events: standard simulations from five European countries. Brussels: Center for European Policy Studies (CEPS).




The pension that one can expect to receive after retirement is a function of previous labour market circumstances and decisions, together with the - possibly compensating - elements of the existing pension system. This report is based on standard simulations to demonstrate the impact of choices that women commonly make on the pension benefit that they later receive. The decisions on which we focus concern complete or part-time career interruptions in response to care responsibilities for a child or an older parent. Standard simulations, also known as hypothetical or model person simulations, are calculations of income packages (or other outcomes) for a hypothetical individual, solely based on the applicable tax and benefit rules and the characteristics of the individual. In the project reported on here the focus is on the effects of labour market decisions, mediated by the rules of the pension system, on the future pension. A pension model is used to calculate the resulting public pension at the statutory retirement age (or at the moment of early retirement). The key advantage of standard simulation is that, by fixing the definitions of the hypothetical individuals and varying only particular labour market decisions, the resulting difference in outcome (pension) can be unambiguously attributed to the decision, given her circumstances and the pension regulations.



  • Center für Volkswirtschaftslehre