Guarantee pensions and the baby boom generations

Jussi Haapa-Aho~Heikki Peltola, Finlande

With 'guarantee pensions', we refer to minimum pensions that serve the purpose of providing a minimum subsistence security for pensioners. In Finland, this role is played by the national pension, which is offset by any earnings-related pensions paid to its recipient. In the context of minimum pensions, various simulation models have proved useful tools for the forecasting of pensioner populations, of incomes and expenditures, and of the financial balance. An aggregate deterministic simulation model has been developed to assist in national pension projections.In many countries, the large post-war baby boom generations are about to reach old-age retirement age. In Finland, this trend will be particularly pronounced in 2010-2030. The retirement of the baby boom generations together with low fertility rates will increase the financial burden of retirement provision. Retirement projections suggest that the number of pension beneficiaries in Finland will increase by a factor of at least 1.4. The cost of earnings-related retirement provision is increasing as well. The cost of the Finnish national pension scheme, on the other hand, will not increase in real terms unless pension levels are raised by specific decision. Any pension calculations will be sensitive to the underlying assumptions about economic performance on which they are based. The ability to pay for future pension expenditures will be decisively influenced by realised rates of economic growth.
Date: 30 May - Time: 10:30 to 12:00 - Room: 253
Theme: 3.A. Actuarial problems related to the retirement of the baby-boom