Projecting a Life-cycle Income – a Simulation Model for the Slovak Pension Benefit Statement

Ján Šebo

Faculty of Economics, Matej Bel University in Banská Bystrica

Daniela Danková

Faculty of Economics, Matej Bel University in Banská Bystrica

Ivan Králik

Faculty of Economics, Matej Bel University in Banská Bystrica


Abstract

The introduction of a regulation requiring pension asset managers to provide savers with an estimation of pension benefits opened a wide range of scientific questions on the projection methods and estimation of input parameters. One of them is the estimation of life-cycle income for calculating expected contributions and the estimation of the benefit ratio at the moment of retirement. We present an estimation of life-cycle income functions for various age and educational cohorts influenced by temporary labor market shocks. By employing the resampling simulation method for incorporating macroeconomic shocks, we have shown that using longitudinal data on the income process from a large closed economy could bring valid results for a country with a small open economy as well where the longitudinal data on income processes of individuals are unavailable. Our findings could serve a practical use when pension or other social benefits tied to individual income should be modelled.


Keywords:

microsimulation, pension benefits, life-cycle income, labor market shocks

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Published
2020-12-31

Cited by

Šebo, J., Danková, D., & Králik, I. (2020). Projecting a Life-cycle Income – a Simulation Model for the Slovak Pension Benefit Statement. Olsztyn Economic Journal, 15(4), 271–284. https://doi.org/10.31648/oej.6380

Ján Šebo 
Faculty of Economics, Matej Bel University in Banská Bystrica
Daniela Danková 
Faculty of Economics, Matej Bel University in Banská Bystrica
Ivan Králik 
Faculty of Economics, Matej Bel University in Banská Bystrica



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