The main goal of the Norwegian pension reform of 2011 is to improve long run fiscal sustainability, not least through stronger labour supply incentives. We assess to what extent the reform is likely to live up to these intentions. To this end we combine a dynamic microsimulation model, which includes a complete description of the Norwegian population and the pension system, with CGE-modelling of the effects on all government revenues and expenditures. We find that the reform is likely to make a great fiscal impact in the long run, and higher employment plays an important role in this respect.
Abstract:We study the relationship between early claiming of pensions and incentives in the highly flexible Norwegian public pension system, measuring incentives to claim based on an estimated model for expected longevity. Despite a strong correlation between incentives and claiming decisions, the additional costs to public budgets arising from this selection turn out to be modest. Based on analyses exploiting only variation in expected pensions generated by variation in parental longevities and only claiming of pensions not in conjunction with retirement, we conclude that part of the selection is active: Some individuals claim pensions early because they gain from doing so. Vi finner at personer som velger tidlig uttak av pensjon i stor grad er de som har mest å tjene på tidlig uttak, som følge av kort forventet levetid. Videre viser vi, ved å bruke foreldres levetid som instrumenter for egen forventet levealder, at deler av denne sammenhengen er kausal: en betydelig andel av de som velger tidlig uttak av pensjon ser ut til å gjøre dette fordi det resulterer i høyere forventede pensjonsutbetalinger. Til tross for en sterk negativ sammenheng mellom forventet levealder og tidlig uttak av pensjon finner vi at ekstrakostnadene for pensjonssystemet som følger av denne sammenhengen er heller beskjedne. Dermed bør kostnader som følge av individuelle tilpasninger til levealdersjustering av pensjoner ikke tillegges betydelig vekt i utformingen av offentlige pensjonssystemer.
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