The Distribution of Pension Wealth in Europe
Javier Olivera, LISER
Pension wealth is one of the key components to obtain an augmented measure of household wealth, and therefore studying the distribution of pension wealth contributes to the growing literature assessing wealth inequality. This is particularly important in countries with generous pensions. In this paper, pension wealth inequality is estimated in elderly households for 26 European countries in 2006 and 2014 by exploiting the cross-sections of the EU-SILC survey. Life tables by educational level (which captures socio-economic status SES), sex, cohort, country and year are estimated with auxiliary data in order to assess the role of life expectancy inequalities on pension wealth. The results indicate that differential mortality due to SES increases pension wealth inequality. In most of the countries this effect has decreased between 2006 and 2014, which means that SES inequalities in mortality are less important in explaining today’s pension wealth inequality. Gini recentered influence function (RIF) regressions confirm the diminishing influence of tertiary education on pension wealth inequality. Finally, pension liabilities are also computed, revealing worrying levels of increasing implicit debt. This debt is larger than GDP in 14 countries.