The financial well-being of older people in Europe and the redistributive effects of minimum pension schemes

Abstract

This study analyses the financial well-being of
elderly people across Europe. Using the European microsimulation model EUROMOD,
which facilitates the identification of minimum
pension schemes in a comparable way across countries, we show the extent to
which these schemes serve to reduce the risk of poverty among elderly. The main findings show that there is a strong
correlation between the resources allocated to the minimum pension schemes and
the reduction in poverty risk among the elderly. Nevertheless, the financial
well-being of older people depends crucially on the pension system as a whole.
Countries with generous minimum pension schemes seem to allocate relatively
fewer resources to other pillars of the pension system. On the one hand, they
are more effective in reducing elderly poverty rates. On the other hand, they
fail to ensure a level of financial well-being of older people in line with the
overall population.