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The welfare effects of the Finnish survivors’ pension scheme

Author

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  • Niku Määttänen

    (The Research Institute of the Finnish Economy (ETLA), in Helsinki, Finland.)

Abstract

The mandatory pension system in Finland includes survivors’ pensions to surviving spouses. The survivors’ pension scheme has been criticized on equity grounds because it represents a significant net transfer from singles to certain type of married couples. However, before possibly eliminating or reforming the scheme, it is important to understand its welfare effects. In this paper, I analyze survivors’ pensions as part of the overall pension insurance system. I use a numerical life cycle savings model to evaluate the value of current survivors’ pensions for different households in welfare terms. I find that the current survivors’ pensions are likely to be a very valuable part of the overall pension insurance for many households. In the absence of distributional concerns, it would probably be optimal to further increase survivors’ pensions.

Suggested Citation

  • Niku Määttänen, 2014. "The welfare effects of the Finnish survivors’ pension scheme," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 39, pages 1-3.
    • Handle: RePEc:noj:journl:v:39:y:2014:p:3
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    References listed on IDEAS

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    1. Bruce Bradbury, 1996. "Household Income Sharing, Joint Consumption and the Expenditure Patterns of Australian Retired Couples and Single People," Discussion Papers 0066, University of New South Wales, Social Policy Research Centre.
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    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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