A MICROSIMULATION MODEL FOR SLOVENIAN PENSION SYSTEM

Mitja ČOKBoris MAJCENJože SAMBTTomaž TURK

2nd Microsimulation research workshop

October 2012, Bucharest, Romania

CONTENT AIMS OF THE PROJECT ESTABLISHMENT OF A SYSTEM OF LINKED TADABASES MODULES

PIT and SSC module Socio-demographic module

Sub-modul for weights Economic module

Model of generational accounts Pension module

“DYNAMIC” PENSION MODEL USER FRIENDLY INTERFACE CONCLUSION

AIMS OF THE PROJECT

Upgrading of the existing MSM (PIT and SSC) and

model of Generational accounts

Development of a socio-demographic, exconomic

and pension modules

Adding “time dynamics” through weights

Establishment of a system of linked tadabases

Possible platform for other modules (social

transfers, education, health)

ESTABLISHMENT OF A SYSTEM OF CONNECTED TADABASES

Sample of 40,000 households with 112,000 individuals

It is part on Statistical Office annual work plan

New base year - 2010

To be renewed every three years

Remote data access to databases for research purposes

MODULES

PIT and SSC module Calculation of PIT/SSC

Possibilities to change any tax parameter, e.g:

Additional PIT brackets

SSC ceiling..

User friendly interface

MODULES

Socio-demographic module It is based on Eurostat demographic projections

EUROPOP2010

Possibilities to change any demographic parameter:

Fertility

Mortality

Migrations

Possibilities to change transion functions for demographic

parameters

User friendly interface

MODULES

Sub-module for weights Enables a “construction” of the entire population

It is run after changes in demographic parameters are set

Time consuming process: one hour for two dimensions

We use two dimensions: age (one year age profiles) and

gender

Static-dynamic model (future projections are based on

weights changes)

User friendly interface

MODULES

Sub-module for weightsWeights for selected age, sample of 112,000 individuals,calibrated to EUROPOP2010

Age 2007 2010 2020 2030 2040 2050 2060

0 16,3 18,6 17,2 14,8 16,3 16,0 14,8

20 16,5 15,6 12,2 15,2 13,9 12,2 13,3

40 18,0 16,6 19,0 16,0 12,4 14,9 13,7

60 16,7 19,9 22,2 21,6 24,6 20.9 16,3

80 20,7 22,7 26,5 34,8 41,3 42,3 50,2

90+ 23,0 22,5 54,4 76,7 105,2 165,1 200,9

MODULES

Economic module

It connects the results of other modules:

Population <= socio-demographic module

Number of pensioners/insured <= pension module

Productivity and unemployment rates are exogenous

variables (in baseline scenario from the EU Commision

assumptions), set by user

MODULES

Economic module It calculates aggregates:

GDP

Different categories of government revenues/expenditures (taxes by type etc.)

Public deficit/surplus

Public debt

Pensions

It calculates EU indexes of long-term sustainability S1 and S1

User friendly interface

MODULES

Economic module – Generational accounts

It calculates generational accounts for each generation- i.e.

net financial position of representative individual regarding

the public-finance system in the rest of his/her life

If reveals the impact of each scenario on each generation

User friendly interface

MODULES

Pension module Reproduces the pension system from base year -2010 It is based on old-age pensioners who retired in period

2000-2010 Includes all pension system parameters (pay-as-you-go):

Working period/age conditions

Other conditions (e.g. number of children; compulsory military service)

Calculation of pension base

Pension formula

Indexation of pensions

Health insurance for pensioners

MODULES

Pension module NDC scheme

Basic concept is included (formula for NPV of contributions and rents)

MODULES

Pension module – how does it work?

Module defines individuals who fulfill retirement conditions

Calculates their pensions

Calculates aggregates (pensions, number of pensioners,

active contributors)

Transition periods are taken into account – they can be set

by user

User friendly interface

“DYNAMIC” PENSION MODEL

CONSISTS OF FOUR MODULES: PIT and SSC module Socio-demographic module

Sub-module for weights (GREGWT) Economic module

Model of generational accounts Pension module

WRITTEN IN MATRIXES

IN REAL TERMS (NO INFLATION)

WITH USER FRIENDLY INTERFACE

“DYNAMIC” PENSION MODEL

SOCIO-DEMOGRAPHIC

GREGWT

PENSION PIT / SSC

ECONOMIC / GENERATIONAL ACCOUTS

Demographic assumptions

Population_F

Population_M

WEIGHTS

Fundamental base

Fundamental base Matrix of retirenment conditions

Sum of pensions

Who is retired (status)

Sum of PIT / SSC Rate of employment

Rate of retirenment

External (user) parameters

External (user) parameters

Fundamental base

USER FRIENDLY INTERFACE

Enables scenario settings

It is used as data-warehouse – contains policy definitions

It connects all four modules

Displays the results

USER FRIENDLY INTERFACE

AVERAGE PENSION

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

2046

2048

2050

2052

2054

2056

2058

2060

0

200

400

600

800

1000

1200

1400Povprečna pokojnina

Povprečna pokojnina Povprečna pokojnina

EUR

NUMBER OF PENSIONERS/EMPLOYEES

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

2046

2048

2050

2052

2054

2056

2058

2060

.000

10000.000

20000.000

30000.000

40000.000

50000.000

60000.000

70000.000

80000.000

90000.000

100000.000

Število upkojencev in zavarovancev

število upokojencev SKUPAJ število zavarovancev

število upokojencev SKUPAJ število zavarovancev

PENSION EXPENDITURES AS SHARE OF GDP

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

2046

2048

2050

2052

2054

2056

2058

2060

000

000

000Delež pokojnin v BDP

delež pokojnin v BDP delež pokojnin v BDP

Dele

ž

CONCLUSIONS

A SYSTEM OF LINKED TADABASES IS ESTABLISHED

ALL FOUR MODULES ARE CONSTRUCTED

THE MODEL WORKS

CHALLENGES? Remote data access to the model (Statistical Office

server) Long-term maintenace of the model Possible platform for other modules (social transfers,

education, health)