What Will Retirement Pensions Be Like? Analysis of Spanish Future Pensioner Households in Terms of Poverty

Abstract

The Spanish public retirement pension system, the same as that of many European countries, faces two important risks in the long term. On the one hand, the sustainability of the current pay-as-you-go system and, on the other hand, the ability to maintain an acceptable standard of living for the retired population. This paper presents a study on the current situation of the Spanish public retirement pension system and its effect on the future retired population. In recent years, the concern for the long-term sustainability of the system, which is based on pay-as-you-go and defined benefit, has been very present. For this reason, two major reforms were carried out in 2011 and 2013; however, different investigations have indicated the reduction in future retirement pensions as a possible consequence. Regarding this dilemma, this paper aims to study the future poverty risk of the retired population due to the current formulation of the system, by conducting, for this purpose, an analysis of the purchasing power of future pensioners based on the EU-Statistics on Income and Living Conditions (SILC) 2016 of the National Institute of Statistics of Spain. As a result, a future reduction in the replacement rate was observed, affecting the younger population to a greater extent, as well as an increase in poverty in pensioner households using two different scenarios.

A defined benefit pension plan model with stochastic salary and heterogeneous discounting

“…The study of DB pension plans is relevant since they continue to be important in the OCDE countries. Their pension systems are of DB type, see Table 2 in Urbano et al (2021). These plans are advantageous for workers, because they do not take the risk, and therefore are an incentive to take advantage of them.…”

Spatial Differentiation and Influencing Factors of Poverty Alleviation Performance Under the Background of Sustainable Development: A Case Study of Contiguous Destitute Areas in Hunan Province, China

“…In terms of poverty reduction, some scholars use the multidimensional poverty index to evaluate poverty (Bahrami and Hashimee, 2019), discuss poverty reduction (Shabbir et al, 2019), and formulate the policies concerning poverty reduction (Leventi et al, 2019). On the other hand, more scholars formulate poverty reduction policies by studying the impact of social factors on poverty (Urbano et al, 2021). For example, microfinance is analyzed in order to have a better understanding of poverty reduction.…”