Longer life, longer in good health, working longer? Implications of educational differences for the pension system

A person’s socioeconomic position (SEP) is strongly associated with his or her health status and risk of disease and premature death. In all countries with available data, including the Netherlands, people with a higher level of education live longer, and much longer in good health, than people with a lower level of education. This has important implications for the pension system.

First, the heterogeneity in mortality and health may lead to differences in the accumulation and/or decumulation of pensions between low and high educated, and may affect the degree of solidarity between low and high educated. Second, the heterogeneity in healthy life expectancy implies that the stepwise increase of pension age may increase the cost for disability pensions, as working until higher ages will be more difficult for lower educated people for health reasons.

This project aims to provide separate projections of future (healthy) life expectancy by level of education and to use these to provide more insight in the effect of sharing of the longevity risk on the degree of solidary, including the (new) individual pension contract with collective sharing of longevity risks that is currently under discussion for the Dutch pension system, and the implications of the increasing retirement age. The possibilities of using the projections and other insights generated in the project for the sector, including for the calculation of experience mortality (“ervaringssterfte”), will be addressed together with experts from the pension sector and social partners in sounding boards. Because data for the Netherlands are limited, we will take advantage of data collected in the framework of a new EU funded project focusing on social inequalities in healthy ageing (the LIFEPATH project).

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Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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