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For the projection of social sustainability indicators, the Federal Planning Bureau uses the dynamic microsimulation model MIDAS, which has recently undergone a major revision. In this working paper we report a projection up to 2070 of poverty risks and income inequality among the elderly, pensioners and the population under 65 years, in a scenario with current pension policies and projected demographic and socio-economic evolutions.
The first part of this Working Paper discusses the main trends in Belgium regarding the risk of poverty, compared to those in the EU27 and neighbouring countries. A second part shows that the increase in the risk of poverty in the population under 60 years can be partly attributed to an increase in the concentration of the lack of paid work in certain households. Also, social security benefits and social assistance benefits are less and less successful in raising jobless households above the poverty threshold.
This Working Paper puts the policy choices made in the regional child benefit reforms into perspective. Using the microsimulation model EXPEDITION, the expected direct effects of these reforms on child benefit expenditure and income distribution are mapped out. Special attention is paid to the effects on the simulated poverty risk of (families with) children, as this was a shared concern during the reforms in the different regions.
This Working Paper identifies the characteristics that explain severe material deprivation in Belgium, while making a distinction between people aged below 65 and those aged 65 or above. Severe material deprivation has decreased for both groups. Young people are more impacted than the elderly. Although there is a clear link between income and deprivation, the overlap between individuals identified as at risk of poverty and those as severely deprived is far from perfect. The correlation between income poverty and deprivation is weaker for the old group than for the young.
The Federal Planning Bureau has developed within the Nowcasting project a dynamic microsimulation model for nowcasting and medium-term forecasts (currently up to 2020) of indicators of poverty and social exclusion. Key messages of this project are that nowcasting and medium-term forecasting are now possible using a fully dynamic microsimulation model. The provisional results of the model suggest that the overall poverty risk would remain stable, but that of the 65+ subpopulation would decrease over time, while that of the younger population would show a small increase. Furthermore, the increase of overall ine-quality would come to a halt and the level of inequality would become more stable. Finally, the very low work intensity rate would continue its decrease, driven by the continuing increase of the employment rate among the working-age population.
In preparation of the 2018 Pension Adequacy Report by the European Commission and the Social Protection Committee, teams from Belgium, Sweden and Italy use their microsimulation models to simulate the possible developments of pension adequacy while taking into account the set of economic and demographic projections developed by the AWG. The results of this exercise complement the AWG simulations of pension expenditures in a context of demographic. The results described in detail in this report were summarised in section 5.1.2. of the 2018 Pension Adequacy Report.
Since a couple of decades, the pension policy of member states is a focal point of attention on the European level. Securing financial sustainability by the AWG requires a prospective vision on ageing, labour market developments and social policy. But a sensible assessment of financial sustainability cannot do without taking into account the prospect ive development of pension adequacy. The SPC does this through prospective theoretical replacement rates and benefit ratios. However, prospective values of the key ISG indicators, such as the risk of poverty rate or the Gini are not available.
This working paper describes the second version of MIDAS (an acronym for ‘Microsimulation for the Development of Adequacy and Sustainability’), a dynamic population model with dynamic cross-sectional ageing. This model simulates the life spans of individuals in the base dataset, including with their interactions, for the years between 2003 and 2060. It enables to produce, on that period, adequacy assessment of pensions in Belgium that is coherent with the baseline budgetary projections of the 2009 report of the Study Committee for Ageing realized by the Federal Planning Bureau’s semi-aggregated MALTESE model. Indeed, MIDAS aligns its socio-economic and demographic projections and its macro-economic assumptions on the 2009 report of the Study Committee for Ageing. The adequacy of pensions is analysed through the replacement ratio, inequality measures among pensioners and poverty risk indicators of the elderly.
In the context of a European-funded sixth framework project called AIM, a dynamic microsimulation model MIDAS is being developed for Belgium, Germany and Italy. This is a joint effort by three institutions, the German DIW, the Italian ISAE and the Belgian FPB. This model MIDAS simulates future developments of the adequacy of pensions, following wherever possible the projections and assumptions of the Ageing Working Group. This paper describes the model MIDAS in detail. It next presents and discusses some simulation results for Belgium, Germany and Italy. Finally, the simulation results of two alternative policy scenarios are presented and discussed.