Evaluating a Pension System Considering Children Born: The Case of Austria

Prinz, C. (1992). Evaluating a Pension System Considering Children Born: The Case of Austria. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-92-028

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Abstract

The paper discusses the consequences of the adoption of a new pension system that considers the number of children born in Austria. Combining a demographic family model with a pension model and cost profiles of social security expenditures, a policy simulation tool is obtained which allows the testing of different social security policies. The feasibility of the suggested pension reform is examined on both the system level and the individual level to determine under which circumstances such a policy is reasonable and affordable.

The first conclusion is that the new pension system would be cost neutral. Secondly, provided a certain response to the pronatalist character of the new system in the form of an increase in fertility, the performance of the social security system would improve. Thirdly, the new system would significantly change the income distribution of retired women to the extent that single and divorced women with children are no longer discriminated. Thus, the emancipatory goal of the policy is fulfilled.

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