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In this article we investigate the impact of the 1996 pension crisis in Russia on several measures of subjective well-being (SWB). Using a difference-in-difference strategy and an individual fixed-effects model, we find that an exogenous shock to the redistribution system has a significant negative effect on the SWB of pensioners who fail to receive their pensions. The effect differs across aspects of life evaluation; the shock has a significant negative effect on current life satisfaction (LS), whereas it has no effect on self-assessed health. The effect of the shock extends to non-pensioners who live with pensioners in arrears: they experience an equally strong and significant decline in LS even after accounting for personal income. In addition, we find that the pension crisis leads pensioner households to neither receive more nor send less money to extended family, thus leaving these households to bear alone the entire monetary cost. Lastly, we find suggestive evidence that the crisis, despite being a purely monetary shock, affects well-being in ways that go beyond the monetary size of pension loss. Policies aimed to fully compensate for such disruptions in the redistribution system would need to take these externalities into account.

Although tax relief on pensions is a controversial area of government expenditure, this is the first study of the tax effects for a real-world defined benefit pension scheme. First, we estimate the tax and national insurance contribution (NIC) effects of the scheme's change from final salary to career average revalued earnings (CARE) in 2011 on the gross and net wealth of the sponsor, government, and 16 age cohorts of members, deferred pensioners, and pensioners. Second, we measure the size of the twelve income tax and NIC payments and reliefs for new members and the sponsor, before and after the rule changes. We find the total subsidy split is roughly 40% income tax subsidy and 60% NIC subsidy. If lower tax rates in retirement and the risk premium effect of the exempt-exempt-taxed (EET) system are not viewed as a tax subsidy, the tax subsidy to members largely disappears. Any remaining subsidy drops, as a proportion of pension benefits, for high earners, as does that for NICs.

This paper examines the Italian social policy instruments to contrast poverty among the elderly, focussing on the so-called social pension. Firstly, it analyses the institutional characteristics of the social pension, assessing its explicit and implicit design according to poverty indicators that are consistent with the official standards by the Italian Poverty Commission. The main conclusions are that the social pension acts as a limit to the poverty intensity rather than as a limit to the poverty incidence, and that in case of beneficiaries with a dependent spouse the pension includes an extra benefit that ensures the couple is receiving a minimum income above the poverty line. Secondly, the paper examines the ex-post performance of the social pension, by using data from the Bank of Italy Survey of Households Income and Wealth (BISHIW). In this analysis we take into consideration also individuals' and household's characteristics that are ignored by the law requisites for the access. Data point to some inefficiency in the selectivity of the system and to some ineffectiveness in contrasting poverty. For a social pensioner's household the econometric analysis shows that the probability of falling into poverty is higher, but only during economic downturns; that poverty on average is more widespread, although less intense; that poverty has more a cyclical than a persistent nature. Furthermore, there is evidence of a relevant role played by the interactions among household's and individuals' characteristics in determining the degree of exposure to poverty risks. An appropriate consideration of these aspects in the design of the tools directed at contrasting poverty seems vital in order to improve the effectiveness and the efficiency of the policy action.

This paper considers the effects on current pensioner incomes of reforms designed to improve the long-term sustainability of public pension systems in the European Union. We use EUROMOD to simulate a set of common illustrative reforms for four countries selected on the basis of their diverse pension systems and patterns of poverty among the elderly: Denmark, Germany, Italy and the UK. The variations in fiscal and distributive effects on the one hand suggest that different paths for reform are necessary in order to achieve common objectives across countries, and on the other provide indications of the appropriate directions for reform in each case.

In the 1990s, individuals aged 18–64 were eligible for disability insurance, if their work capacity was reduced by at least 25 percent (50 percent before 1993). In the beginning of the period, before 1991, disability insurance could also be granted for labor market reasons (i.e., if unemployed had been compensated long enough to exhaust their benefits – obtained benefits for 300 days). This possibility was gradually phased out after 1991. In 1995, the enforcement of the rules was tightened. When evaluating applications for disability pensions, local insurance offices now had to request a medical certificate and a work-related test of the applicant's degree of work capacity. Local offices also had to consult the applicant's employer, physician, or other qualified personnel, and even pay personal visits to the applicant. The possibilities for rehabilitating the applicant should also be investigated. From 1997, work incapacity should be evaluated in relation to all possible employment opportunities. Potential income changes resulting from changes in employment should not affect the evaluation⁴ (National Social Insurance Board, 2005).

Based on a multiple spells approach, this paper studies the extent and the composition of chronic poverty in Germany. The results indicate that about one-third of cross-sectional poverty in a given year is chronic. The characteristics that are most closely associated with long-term poverty are economic inactivity and pensioner status, while the number of children and the gender of the household head do not seem to have a systematic effect. This is in contrast to cross-sectional results where the biggest poverty risk is usually unemployment and a large number of children, while pensioners do not face particularly high poverty risks. Estimates from a multiple spells hazard model further suggest that 6% of the population have unobserved characteristics that lead to low poverty exit and high re-entry rates, making these individuals likely candidates for chronic poverty. A comparison with results for Great Britain and the United States suggests that poverty is less persistent in Germany.

Since SESIM is of a fundamental importance for this analysis, we also give a short presentation of the income-generating mechanisms in the model, focusing on earnings and income from capital.

Using UK survey data on labour force participation and earnings and a model developed by the Department for Work and Pensions, I describe the unique challenges women face in accruing private pension benefits and simulate likely outcomes for women under the Government's proposed system of personal accounts. Projections of savings in personal accounts for male and female full-time median earners with the same work histories reveal that women would have about 27 per cent less savings available for retirement due to their lower earnings. This gap would grow, to 31 per cent, upon annuititization because single-sex annuity rates are used. Additional modifications that take into account typical work patterns of women, such as extended periods of part-time work, further reduce the savings they would accumulate in personal accounts. Several key policy provisions could improve outcomes for women including allowing spousal contributions and requiring joint-life or unisex annuities.