Longevity, Working Lives, and Public Finances

The effects on intra‐generational inequality of introducing a funded pension scheme: A microsimulation analysis for Estonia

“…In the transition to DC schemes, several countries, including Estonia across the period 1998–2002, adopted the World Bank's original three‐pillar pension model (World Bank, ), each with its own variations. The three pillar strategy should ensure the sustainability of pension systems, as tightening the link between contributions and pension income should provide incentives to increase labour force participation and to extend labour market activity (Börsch‐Supan, ; Lassila and Valkonen, ). Also, the shift to a partially funded system would be a low‐risk strategy in a context of population ageing and low inflation (Disney, ).…”

The Finnish pension system from a comparative Nordic perspective

“…On the other hand, the cuts in the future pensions, the agreed increases in the statutory retirement age and the introduction of the connection between life expectancy and retirement age has substantially improved the pros-pects of the financial sustainability of the pension scheme. An analysis using the realisations of a stochastic mortality projection as inputs in a numerical overlapping generations model demonstrates that these rules effectively isolate the financial sustainability of the pension system and even that of the overall Finnish public finances from variations in longevity (Lassila and Valkonen, 2018).…”

The Finnish Pension System and Its Future Challenges

“…Analysis performed using the stochastic population projections as inputs in an economic model shows that the Finnish idea of linking both pensions and the retirement age to life expectancy can manage longevity uncertainty very well. Longer working life helps to mitigate the replacement rate decline at the same time as the fi nancial sustainability of both the pension system and the general government is improved (Lassila and Valkonen, 2018).…”