Pension Reforms toward an Aging Society

by azie

The function of this paper is to explore the possibility of an age-free active society in connection with pension reform. An aging population is a common phenomenon among the world's advanced countries. Among the problems an aging population poses, the financing of public pensions is one of the most difficult with which to manage.
In the process, it will examine the inherent influences of pension schemes that could pose obstacles to promoting the employment of older people. The pension scheme and employment situation of older people are closely related. The public pension system to have an effect on retirement inducement influences the employment situation of older people.
This paper also discuss about the impact of public pension on the labor supply of older people. Public pension benefits act to reduce the labor supply of pension-eligible older people. There are two ways that public pension schemes lead to a reduction in labor supply. One is the income effect. Pension-eligible older people are able to retire upon their pension benefit, which they receive as no earned income. The other is the effect of the earnings test of public pension schemes. Under it, pension benefits may be reduced or stopped according to the level of earnings by pension-eligible people who continue to work and earn income. Because the possibility of working in the same occupation correlates to mandatory retirement experience and there is high correlation between public pension eligibility and mandatory retirement experience, the observation sample is divided between those with mandatory retirement experience and those without it. In both cases, workers who receive public pension benefits have a statistically lower possibility of being in the same occupation as they were at age 55. This result means that pension eligible workers in their 60s have a lower possibility of being in a workplace where their abilities are fully utilized.
From the above discussion, we can conclude that it is useful to make policy proposals on pension reform in regard to establishing an "age-free active society. This paper in such a way does not discourage older people from continuing to work." Because public pensions affect income in a way that induces retirement, it is important to raise the pension eligibility age so as to avoid the effect of discouraging continued work.