Research on Pension System’s Financial Sustainability
Monitoring the development of the expenditure and contributions of the pension system is essential from the point of view of the financial, social and political sustainability. We regularly produce data on the future development of pension expenditure, contributions and benefits. In our projections, we take into account, for example, the effect of employment and the effective retirement age on the development of the expenditure and the contributions.
When assessing the financial sustainability of the pension system, we see the pension system as part of the intergenerational income transfer system. In our research, we assess changes in the consumption and labour supply of various age groups relative to changes in taxation and pension provision. As part of the sustainability analysis, we produce information on the short-term and long-term effects of various overall financial disturbances on the pension system.
Current research projects
Long-term pension expenditure and contributions
Aim: We will assess how the statutory pension expenditure and the average benefits have developed, as well as the long-term financing of private-sector earnings-related pensions.
Realization: We will assess the expenditure and contributions with the long-term projection model of the Finnish Centre for Pensions. The model simulates the operations of the statutory pension system and makes it possible to issue projections to meet the forecasting and planning needs of the pension system.
Schedule: Ongoing. Most recent report published in Finnish in 2016, the next one in 2019.
Researchers: Kaarlo Reipas, Heikki Tikanmäki and Mikko Sankala
Macroeconomic model of overlapping generations
Aim: In this project, we will produce a numerical macroeconomic model of overlapping generations to analyse the economic effects of changes in the pension system and the age structure of the population.
Realization: We will model the Finnish earnings-related pension system and other age-related expenses with the GAMS program to a numerically solvable macroeconomic model.
Researchers: Risto Vaittinen and Sanna Tenhunen