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Closing the gender gap in pensions. A microsimulation analysis of the Norwegian NDC pension system

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In this paper we use an advanced micro-simulation model to study the distributional effects of the reformed Norwegian pension system with a particular focus on gender equality. The reformed Norwegian system is based on the NDC-formula with fixed contribution/accrual rates over the active life-phase and with accumulated pension wealth being transformed into an annuity upon retirement. A number of redistributive components are built into the system that makes it deviate from complete actuarial fairness: a unisex annuity divisor, a ceiling on annual earnings, generous child credits, a possibility for widows/widowers to inherit pension rights from a deceased spouse, a targeted guarantee pensions with higher benefit rates to single pensioners compared to married/cohabitating pensioners, and finally the tax system that is particularly progressive in its treatment of pensioners and pension income. Taking complete actuarial fairness as the point of departure, we conduct a stepwise analysis to investigate how these different components of the National Insurance pension system impact on the gender gap in pensions and on inequality in the distribution of pension income within a cohort of pensioners.

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  • Elin Halvorsen & Axel West Pedersen, 2017. "Closing the gender gap in pensions. A microsimulation analysis of the Norwegian NDC pension system," Discussion Papers 855, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:855
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    References listed on IDEAS

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    1. Assar Lindbeck & Mats Persson, 2003. "The Gains from Pension Reform," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 74-112, March.
    2. Richard Disney, 2004. "Are contributions to public pension programmes a tax on employment? [‘Welfare state and competitiveness’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 19(39), pages 268-311.
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    More about this item

    Keywords

    Pensions; Gender gap; Inequality; Micro simulation;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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