Social Affairs Department of the Netherlands Ageing and Pensions Model

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Social Affairs Department of the Netherlands
Ageing and Pensions Model
Ministry of Social Affairs and Employment

• Marieke van der Werf
• Jan-Maarten van Sonsbeek
• Raymond Gradus

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Dutch pension system

• Three pillars
• State pension financed through pay-as-you-go
• Entitlements build up between age 15 and 65
• Pension age 65
• Singles benefit 70 minimum wage
• Couples benefit is twice 50 minimum wage
• Partner allowance until 2015

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Three Pillars
First Pillar
Second Pillar
Third Pillar
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Dutch pension system

• Three pillars
• State pensions financed through pay-as-you-go
• Entitlements build up between age 15 and 65
• Pension age 65
• Singles benefit 70 minimum wage
• Couples benefit is twice 50 minimum wage
• Partner allowance until 2015

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Necessity for new model

• Old macro model insufficient
• Limited to state pensions
• Information gets lost by creating groups
• Ages
• Certain features are not taken into account
• Incomes
• Migration
• Trends in households

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Aim for the new model

• Budget calculations
• Simulation of policy measures
• Analysis of income effects

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Specifications

• Model type Dynamic
• Programming language SAS
• Almost 17 mln present records plus 20 mln future
  records depending on time span
• Around 500 variables for a 50 year simulation
• Year-to-year model
• Runtime with 1 percent sample size 30 minutes
• Output presented in Excel

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Source Files
CSO
BAO
Aged lt15 in the Neth.
3.2 mln records
11 mln records
2.4 mln records
0.2 mln records
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Modules

• Step 1 Setting parameters
• Step 2 Creating equal starting point for input
• Step 3 Simulating life paths
• Step 4 Reporting
• Step 5 Analyses

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2004
2005
2006
2007 etc.
Aged 0-16 (CSO)
Deaths
Deaths
Deaths
Births
Aged 15-64 (CSO- entitlement file)
Aged 17-64 (CSO)
Emigrants
Immigrants
Emigr.
Imm.
Emigrants
Immigrants
Aged 65 (BAO)
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Modules

• Step 1 Setting parameters
• Step 2 Creating equal starting point for input
• Step 3 Simulating life paths
• Step 4 Reporting
• Step 5 Analyses

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Topics for future research

• Expanding SADNAP with other pension pillars
• Assessment of policy measures
• Rising the retirement age
• Limiting tax privilege for pensioners
• Improvements
• Intergenerational Redistribution
• Coupling of households