nep-age New Economics Papers
on Economics of Ageing
Issue of 2008‒07‒30
four papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Pensions or savings? Ageing in France at the turn of the century By BOURDIEU Jérôme; KESZTENBAUM Lionel; POSTEL-VINAY Gilles
  2. Underreported Earnings and Old-Age Pension: An Elementary Model By Andras Simonovits
  3. Vieux et pauvres : le patrimoine des personnes âgées de 1820 à 1940 By BOURDIEU Jérôme; KESZTENBAUM Lionel
  4. Reforming Retirement-Income Systems: Lessons from the Recent Experiences of OECD Countries By John P. Martin; Edward Whitehouse

    Abstract: As a consequence of early demographic transition, France was the first country to experience population ageing. The process has occurred relatively slowly however, resulting in gradual social adaptations. In this paper, we examine the changing living standards of individuals aged over 60, their place in society, their income and savings between 1820 and 1940, based on a sample from the TRA survey. We focus on old persons' means of living, at a time with only little pension schemes, and we show that very few people were able to live on their savings. Moreover, the extent to which other ways of living old age were available was rather limited and, in all cases, did not increase so as to face with the ageing process. For instance, municipal charity offices (bureaux de bienfaisance) give a means for prominent citizens to provide local assistance to the poorest people throughout the nineteenth century but their importance waned as the earliest forms of state welfare emerged. Therefore, state pension at a broad scale may be thought of as a response to the increasing proportion of poor old people in the beginning of twentieth century France.
    Keywords: ageing, pension, savings, state welfare, France 19th and 20th centuries
    JEL: N33 H55
    Date: 2008–05
  2. By: Andras Simonovits (Institute of Economics, Hungarian Academy of Sciences)
    Abstract: This paper analyzes the interconnections of underreported earnings, savings and oldage pension with the help of a most simple, elementary model. The workers can be divided into three groups: 1) well-paid who report their full earnings, 2) well-paid who report only the minimum earnings (evaders) and 3) the poorly paid. We assume that the evaders save a significant part of their hidden earnings for their old age. We compare three pension systems of equal size: (i) the proportional, (ii) the proportional plus basic pension and (iii) the proportional with means testing. Our major result is as follows: if the evaders can be recognized and excluded, then the means-tested system is superior to the basic system.
    Keywords: reporting earnings, proportional pensions, basic pensions, meansassisted pensions
    JEL: H55 D91
    Date: 2008–05
  3. By: BOURDIEU Jérôme; KESZTENBAUM Lionel
    Abstract: Starting with controversies on workers pensions at the beginning of the 19th century, many debates occurred on individuals' willingness to save for their old days. However it remains difficult to assess old people capacity to live their old age. We investigate the situation of old people before the introduction of pension schemes. Using probate records, we compute the rate of individuals who where able to live on their wealth, by themselves. We conclude that life-cycle savings were largely insufficient for French people to live on it. Above all, the situation of old people, after a continuous improve during the 19th century, get worse in the 1900's: large parts of the elderly population have no or only little means of survival. Moreover, access to retirement is also very limited, depending on gender or occupation.
    Keywords: Epargne, accumulation du patrimoine, retraite, vieillesse, France 19-20e siècles.
    JEL: N33 N34
    Date: 2008–01
  4. By: John P. Martin; Edward Whitehouse
    Abstract: 1. Reforming pensions looms large over the policy agenda of OECD countries. This is hardly surprising since public spending on pensions accounted on average for 7 per cent of OECD GDP in 2005; and this pension spending effort is set to increase significantly over the coming decades in response to population ageing. Pension policy is indeed challenging and controversial because it involves long-term decisions in the face of numerous short-term political pressures. 2. However, the status quo does not always win out so far as pension reform in concerned: public finance crises and the looming threat of ageing populations have proved effective spurs for reform. As a result, much has been done since the early 1990s to make pension systems fit for the future. Nearly all the 30 OECD countries have made at least some changes to their pension systems in that period. In 16 of them, there have been major reforms that will significantly affect future benefits. 3. The purpose of this paper is to summarise these reforms and highlight the main lessons. Section 1 looks at which countries reformed their pensions systems and which did not. It also examines the fiscal challenges posed by public pensions. Section 2 describes the measures in the reforms themselves. These include, among other things, increases in pension age, changes in the way benefits are calculated and smaller pension increases in retirement than in the past. Section 3 explores the impact of these reforms on future pension entitlements of today’s retirees, showing a clear trend to a lower pension promise for today’s workers than for past generations. This means that people will need to save more for their own retirement via private pension schemes, an issue examined in Section 4. This is followed in Section 5 by a review of the main outstanding challenges facing pension systems in OECD countries. The final section presents some concluding remarks. <BR>4. La réforme des retraites occupe une place d’importance dans tous les programmes politiques des pays de l’OCDE. Ceci n’est guère surprenant dans la mesure où les dépenses publiques pour les retraites ont constitué en moyenne 7% du PIB des pays de l’OCDE en 2005 ; et cet effort de dépenses publiques risque d’augmenter de manière significative pendant les prochaines décennies en réponse au vieillissement démographique. Les politiques en matière de retraite font donc face à des défis de taille et sont controversées parce qu’elles impliquent des décisions à prendre à long terme face à de nombreuses pressions politiques de court terme. 5. Pour l’instant, nous n’assistons pas pour autant à un status quo en matière de réforme des retraites. En effet, les crises financières publiques et la crainte grandissante causée par l’apparition d’une population vieillissante ne font qu’encourager les réformes. C’est ainsi que beaucoup a été fait depuis les années 90 pour faire en sorte que les régimes de pensions se réactualisent en tenant compte de l’avenir. C’est presque tous les 30 pays de l’OCDE qui ont ainsi fait quelques changements pendant cette période. Seize d’entre eux ont d’ailleurs opté pour des réformes significatives devant affecter considérablement les prestations futures. 6. Ce document vise à résumer ces réformes et à mettre en exergue les principales leçons à tirer. La Section 1 se penche sur les pays qui ont réformé leurs régimes de pensions et ceux qui n’ont pris aucune mesure. Elle s’intéresse aussi au défi fiscal posé par les pensions publiques. La Section 2, quant à elle, décrit ces réformes, entre autres, l’augmentation de l’âge de la retraite, le changement du mode de calcul des prestations et des augmentations moindres des retraites par rapport aux années précédentes. La section 3 s’arrête sur l’impact de ces réformes sur les prestations futures des actuels retraités. Elle montre une claire tendance à promettre des retraites plus basses aux travailleurs d’aujourd’hui par rapport aux générations antérieures, le constat étant que les travailleurs devront dorénavant économiser davantage en vue de leur propre retraite via des régimes de pensions privés, sujet examiné dans la Section 4. La Section 5 examine les principaux défis auxquels doivent faire face les régimes de pensions des pays de l’OCDE. Le document se termine par des remarques de conclusion.
    JEL: H55 I38
    Date: 2008–06–30

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