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Pension-reform-as-defined-ambition_Petroleumfederatie_30.3.2017

Pension reform as defined ambition Frank Vandenbroucke University of Amsterdam Seminar Belgische Petroleum Federatie – Fédération Pétrolière Belge Brussels 30 March 2017 • European Commission The 2015 Ageing Report Economy 3/2015 Belgian on Reform 2020-2040 www pensioen2040 belgie be pension2040 belgique Schokkaert Devolder Hindriks Towards an equitable and sustainable points system A proposal for pension in Belgium Discussion Paper Series 17 03 Department Economics KULeuven February Réforme des pensions légales: le système de à Regards Economiques numéro 130 Mars Het pensioen op punten: naar een nieuw sociaal contract tussen jongeren en ouderen Leuvense Economische Standpunten (forthcoming) 160 28 140 26 120 24 100 22 80 20 60 40 18 16 0 14 2020 2025 2030 2035 2040 2045 2050 2055 2060 Old age dependency ratio EU Total economic Life expectancy at 65 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 2028 2031 2034 2037 2043 2046 2049 2052 2058 001 000 with constant life 12 10 8 6 4 2 Impact (no change coverage benefit labour market ratio) actual forecast (incl interaction) impact + 70 55 Public % GDP 50 45 35 BR2013 Benefit No all Pensions = managing uncertainty – by integrating adjustment mechanisms the Commission: indexing parameters systems to longevity (e g career requirements & retirement age) Options risk sharing Defined contribution Musgrave rule Fix… Contribution rate (net) Economic Risk workers Shared Demographic retirees ‘Conditional certainty’ individual citizen Stabilize (Musgrave Rule) Conditional macro demographic context choice (number points) x (value point) (actuarial corrections) (indexation income growth) Number <= Value point ≈ f (average employed) Premised a desirable replacement ‘standard worker’ ‘normal career’; career’ takes into account changes demography etc Positive / negative corrections (career) given social stratification entry healthy years Indexation (growth real incomes) flexibility Two objectives: Target stabilisation pensioners/employed Stabilisation rates earned average ratios ⇒ Postponing (flexibility but !) ‘Alternative’ funding (tax shift) Why funding? => diversification Law Supplementary 2003 ‘Democratization’ supplementary Sector approach: SME Embedded dialogue Mobility Guaranteed minimal return Requires large consensus Based sense common purpose: frankvandenbroucke uva nl