Abstract
With societies aging and pension gaps deepening, supplementary pension schemes are treated as the most suitable way of ensuring adequate benefits for pensioners. However, a significant question underlying this research has arisen: how much should one save over the course of his or her professional career to ensure the future pension gap is covered? The following study has two main objectives: to identify the size of the pension gap in five countries (France, Germany, Italy, Spain, and Poland) and to estimate the level of additional savings required to cover it. The study shows that the size of the future pension gap for the average worker in these five countries is between 19% (Italy) and 40% (Poland). Due to different socioeconomic and demographic conditions, the amount of monthly savings needed to cover this gap will vary significantly. In relative terms, fully financing the pension gap for the average worker in a base scenario requires savings from 12% (Italy) to 20% (Poland) of their gross salary. Apart from offering a base scenario, the chapter also includes a sensitivity analysis which considers different values of the applied model’s parameters.
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Notes
- 1.
This is due to the fact that the measure of consumption is not just pure income, but income reduced by savings. The demand for savings is usually lower during retirement (Chybalski and Marcinkiewicz 2016).
- 2.
Similar methodology, although with a different dataset, was also applied by the author in a study on Poland only (Jedynak 2017). The main findings of that study are consistent with the results of this research.
- 3.
Data for a single person without children who earns 100% of the average country wage as of 2015.
- 4.
Please note that this rate should correspond to the technical interest rate used in the actuarial calculations in annuities.
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Jedynak, T. (2020). Is it Still Possible to Receive an Adequate Income from Pensions in the Era of Ageing Societies?—The Great Pension Gap Challenge in Europe. In: Bilgin, M., Danis, H., Karabulut, G., Gözgor, G. (eds) Eurasian Economic Perspectives. Eurasian Studies in Business and Economics, vol 13/1. Springer, Cham. https://doi.org/10.1007/978-3-030-40375-1_4
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