The Impact of Life-Course Developments on Pensions in the NDC Systems in Poland, Italy and Sweden and Point System in Germany

Iga Magda, Warsaw School of Economics (SGH)
Agnieszka Chlon-Dominczak, Warsaw School of Economics
Pawel Strzelecki, Warsaw School of Economics
Irena E. Kotowska, Warsaw School of Economics
Marek Góra, Warsaw School of Economics
Anna Ruzik-Sierdzinska, Warsaw School of Economics

Old-age pensions in the NDC systems reflect the accumulated lifetime labour income. Interrupted careers and differences in the employment intensity, particularly between men and women will have a significant impact on pension incomes in NDC countries. In the paper, we compare the labour market developments in four countries: Germany, Italy, Poland, and Sweden. There are pronounce differences in labour market participation in the four countries: high levels of employment in Germany and Sweden for both men and women are in contrast with low levels of employment in Italy and Poland. In the latter two countries, there is also a large gender gap in labour market participation. Employment pathways are also different – career interruptions for women in Italy lead to de facto very early withdrawal from the labour market, while in Sweden women transfer mainly to part-time employment. Lower intensity of employment and gender pay gaps are important causes of differences in expected pension levels, but there are also differences due to the design of pension system and demographic development. Country-specific employment paths are an important context of the future pension incomes and their adequacy. Current and future labour market and pension policies need to address this challenge. Prolonging working lives and reducing gender gaps, particularly for those at risk of interrupted careers is key to ensure decent old-age pensions in the future. We argue that the pension systems’ design modifications that weaken the link between contribution and benefits would not solve the problem emerging from the large share of people with interrupted careers. On the contrary, it would make the pension systems less sustainable, while the problem would be more challenging in the future.

Presented in Session 1232: Posters