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7. Januar 2015

Cluster-Seminar Öffentliche Finanzen und Lebenslagen

Inequality and Defined Benefit Pensions when Life Expectancy is Heterogeneous

Termin

7. Januar 2015
12:30 - 13:30

Ort

Eleanor-Dulles-Raum
DIW Berlin im Quartier 110
Room 5.2.010
Mohrenstraße 58
10117 Berlin

Sprecher*innen

Daniel Kemptner

This study analyzes the distributional effects of a defined pension benefit system under heterogeneous life expectancies. For this purpose, we propose a methodology that quantifies life expectancy-based regressive redistribution using a life expectancy-adjusted benchmark scenario. This methodology is combined with a structural life-cycle model of labor supply, retirement and consumption decisions that allows for behavioral responses to changes in the pension system. We show that the German pension system induces a large regressive redistribution of life-time income, and has a relevant regressive effect on average annual consumption. Behavioral responses to regressive redistribution matter for the results. Introducing progressivity into either pension contributions or pension benefits only partially offsets the effects of life expectancy-based regressive redistribution via the pension system.

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