Between equality and efficiency: Work incentives, social redistribution and gender equality in the reformed pension system

• Halvorsen, Elin & Pedersen, Axel West (2022). Is the National Insurance pension system progressive in a lifetime perspective? Søkelys på arbeidslivet. 39(1), p. 1–17. doi: 10.18261/issn.1504-7989-2022-01-02. Full text in Research Archive Show summary

  The purpose of this article is to investigate whether the reformed Norwegian National Insurance pension system redistributes from rich to poor in a lifetime perspective, also when taking account of differences in life expectancy and the propensity to prolong working life between educational and income groups. The analysis uses a micro-simulation model, MOSART, applied to individuals born in 1963. The results show that the reformed pension system is indeed weakly progressive, partly due to a particularly progressive system of pensioner taxation. The remaining progressive redistribution is concentrated in the tails of the lifetime income distribution, while the system appears to be neutral at best in terms of cross-class redistribution among wage earners.

• Kitterød, Ragni Hege & Pedersen, Axel West (2020). Deling av pensjonsrettigheter mellom ektefeller. Hva sier opinionen? . Tidsskrift for samfunnsforskning. 61(3), p. 199–221. doi: 10.18261/ISSN.1504-291X-2020-03-01. Full text in Research Archive Show summary

  I Norge, som i mange andre land, får kvinner gjennomgående vesentlig lavere pensjon enn menn. Det norske pensjonssystemet har flere elementer som bidrar til å redusere dette kjønnsgapet, som omsorgsopptjening blant småbarnsforeldre og arv av pensjonsrettigheter etter avdød ektefelle, men disse ordningene innebærer økonomisk subsidiering av par med en tradisjonell, kjønnet fordeling av yrkesarbeidet. Et alternativt virkemiddel, som har vært diskutert i Norge, og som finnes i ulike varianter i andre land, er å innføre en form for deling av pensjonsrettigheter mellom ektefeller. Pensjonsreformen kan ha gjort slike ordninger mer relevante, men vi vet lite om befolkningens holdninger til dette. Basert på en survey fra 2017 (N=3 080) finner vi at både argumenter for og imot slike ordninger har støtte i befolkningen, og at reaksjonene varierer med spørsmålsformulering og kontekst. Oppslutningen om deling av pensjonsrettigheter mellom ektefeller er klart større blant kvinner enn menn og større blant gifte enn blant samboende og enslige. Kvinner i par med en tradisjonell arbeidsdeling er mer positive enn kvinner i likestilte par, mens mønsteret er motsatt for menn. Oppslutningen øker med utdanningsnivå, mens vi ikke finner klare forskjeller etter alder. Variasjonen i oppslutning følger bare delvis den politiske høyre-venstreaksen og dermed tradisjonelle familiepolitiske skillelinjer.

• Koren, Charlotte & Pedersen, Axel West (2019). Kapittel 12: Inntektssikring i alderdommen. In Bay, Ann-Helén; Hatland, Aksel; Hellevik, Tale & Terum, Lars Inge (Ed.), Trygd i aktiveringens tid. Gyldendal Akademisk. p. 226–250.
• Halrynjo, Sigtona; Kitterød, Ragni Hege & Pedersen, Axel West (2019). A woman’s cause? Popular attitudes towards pension credits for childcare in Norway. European Journal of Social Security (EJSS). 21(3), p. 241–261. doi: 10.1177/1388262719869065. Full text in Research Archive Show summary

  In many countries – including Norway – concerns about the persistent gender gap in pensions have led to the introduction of child credits that compensate mothers for losing accrued pension rights while they care for small children. In political debates child credits are typically framed as being unequivocally women-friendly. But, although they help to reduce the gender gap in pension income, they tend to discourage mothers’ paid work and favour couples with a gendered division of paid and unpaid work. This article uses survey data to investigate the extent to which the working age population in Norway supports the idea that parents (mothers) of pre-school children with low earnings should be compensated by the pension system. We examine whether the pattern of support is consistently gendered or whether there are internal cleavages among men and women according to socio-economic status and work-family adaptation. We find that, although both genders express positive attitudes, women are on average more inclined to support child credits than men, but with strong internal divisions. While less-educated women in families with a traditional division of labour constitute the most supportive group, highly-educated women in gender-equal families are as sceptical towards child credits as their male peers. Surprisingly, among both genders, we find that younger cohorts are as supportive as older cohorts.

• Halvorsen, Elin & Pedersen, Axel West (2018). Closing the gender gap in pensions: A microsimulation analysis of the Norwegian NDC pension system. Journal of European Social Policy. 29(1), p. 130–143. doi: 10.1177/0958928717754296. Full text in Research Archive
• Pedersen, Axel West; Hippe, Jon Mathias; Grødem, Anne Skevik & Sørensen, Ole Beier (2018). Trade unions and the politics of occupational pensions in Denmark and Norway. Transfer - European Review of Labour and Research. 24(1), p. 109–122. doi: 10.1177/1024258917748873. Full text in Research Archive Show summary

  Around 1990, trade unions in both Norway and Denmark moved away from their previous hostile stance, and started actively to promote occupational pensions. Over time, full coverage of occupational pensions was achieved in both countries, yet with different scopes, degrees of risk-sharing and modes of governance. Why did both countries go through similar institutional changes, and why were the outcomes still so different? The roads to full coverage were different: In Denmark, this was achieved through wage bargaining; in Norway, through mandating. Denmark developed far more collectivistic schemes than Norway, but recent developments indicate convergence: efforts are being made in Norway to develop encompassing schemes more similar to the Danish ones, while the Danish system appears to be moving in a more individual direction. In both countries, strong trade union branches have at critical junctures forged alliances with their employer counterparts at the expense of trade union solidarity. Both mandatory and negotiated schemes thus have the potential to be sources of solidarity as well as of self-interest within the union movement.

• Stølen, Nils Martin & Nicolajsen, Stian (2016). Fordelingsvirkninger av pensjonsreformen :. Søkelys på arbeidslivet. 33(1/2), p. 24–44. doi: 10.18261/issn.1504-7989-2016-01-02-02.

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• Kitterød, Ragni Hege; Halrynjo, Sigtona & Pedersen, Axel West (2017). Rettferdig pensjon for individer og for par? Tilpasninger og holdninger til det nye pensjonssystemet i folketrygden. Institutt for samfunnsforskning. Full text in Research Archive Show summary

  I 2009 vedtok Stortinget en stor pensjonsreform som trådte i kraft 1. januar 2011. I denne rapporten presenteres resultater fra fokusgruppeintervjuer som hadde som formål å undersøke hvordan individer og par tilpasser seg pensjonssystemet, og hvilke oppfatninger de har av opptjeningsreglenes rettferdighet og motiverende effekt for inntektsgivende arbeid. Hovedvekten ligger på de kjønns- og familierelaterte ytelseskomponentene i folketrygden. Det var i fokusgruppene forståelse for at det gamle pensjonssystemet ikke ville være bærekraftig, men det var mye usikkerhet knyttet til det nye systemet. Hovedelementene i systemet var kjent, men det var lite kunnskap om detaljene og dessuten stor usikkerhet om hvorvidt regelverket fortsatt ville gjelde når deltakerne selv ble pensjonister. Det ble etterlyst mer informasjon om hvordan regelverket fungerer, slik at individer og par kan foreta mer informerte valg og tilpasninger underveis i livsløpet. Ordningen med garantipensjon var lite kjent, men det var stor oppslutning om at det burde være en form for minstesikring slik at ingen ender opp som fattige i pensjonsalderen. Også ordningen med kjønnsnøytralt delingstall fikk stor oppslutning. Det var derimot ulike syn på hvorvidt ordningen med omsorgsopptjening er god og rettferdig, og hvorvidt den kan tenkes å påvirke foreldres arbeidstilbud i småbarnsfasen. Det var mye støtte for at det nye pensjonssystemet, i likhet med det gamle, bør ha en ordning med arv av pensjonsrettigheter mellom ektefeller, men det ble også påpekt at dette kan bli dyrt for samfunnet. Det kan gå på bekostning av andre velferdsgoder, og det kan undergrave prinsippet om levealdersjustering. Verken i det gamle eller det nye pensjonssystemet er det regler for deling av pensjonsrettigheter ved samlivsbrudd. Det kom fram flere argumenter for at en slik ordning kan være rimelig, men det var også klare innvendinger.

• Halvorsen, Elin & Pedersen, Axel West (2017). Closing the gender gap in pensions. A microsimulation analysis of the Norwegian NDC pension system. Statistisk sentralbyrå.

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• Pedersen, Axel West & Halvorsen, Elin (2018). Pensjonsreformen – mellom likhet og effektivitet. Insentivstruktur og fordelingsvirkninger i ny folketrygd.
• Pedersen, Axel West (2018). Sverige øker pensjonsalderen - det bør vi også gjøre. Aftenposten (morgenutg. : trykt utg.).
• Pedersen, Axel West (2018). Levealdersjustering av aldersgrensene. Argumenter for og et konkret forslag.
• Pedersen, Axel West (2018). Pensjonsreformen - hovedtrekk og uløste problemer.
• Pedersen, Axel West (2018). Pensjonsreformen – mellom likhet og effektivitet. In Forskningsrådet, NFR (Eds.), Evaluering av pensjonsreformen - EVAPEN : avslutningskonferanse, artikler fra prosjektene. Norges forskningsråd. p. 61–74. Full text in Research Archive
• Pedersen, Axel West (2018). Partenes rolle i det norske pensjonssystemet.
• Pedersen, Axel West & Halvorsen, Elin (2018). Is the Norwegian pension system progressive? Taking social inequalities in longevity into account.
• Pedersen, Axel West & Hippe, Jon Mathias (2017). En norsk trygdehistorie.
• Pedersen, Axel West (2017). Pensjonsopptjening som insentiv til arbeid. Vil pensjonsreformen få oss til å jobbe mer?
• Pedersen, Axel West (2017). Trade unions and the politics of occupational pensions in Denmark and Norway.
• Halvorsen, Elin & Pedersen, Axel West (2017). Equity versus efficiency in public pension schemes: Compensating for joint work-family decisions. Show summary

  In this paper we use the Norwegian micro-simulation model MOSART to study the trade-off between efficiency losses and equality gains of different pension systems with respect to compensating women for their role as prime care taker in the couple’s joint work-family decision. The reformed Norwegian system is based on the NDC-formula with fixed contribution/accrual rates over the active life-phase and with accumulated pension wealth being transformed into an annuity upon retirement. A number of components are built into the system to compensate women for lower labor market participation and the loss of a male breadwinner: generous child credits, a possibility to inherit pension rights from a deceased spouse, and a targeted guarantee pensions with higher benefit rates to single pensioners compared to married/cohabitating pensioners. This paper develops a framework to quantify the efficiency-equity trade-off of these components using an advanced micro-simulation model. In addition we study the effects of an alternative system in which the couple may have a joint accrual of pension rights. This system acknowledges that a couple’s work-family decision is a joint decision and transforms this into an equally shared pension right.

• Pedersen, Axel West (2017). Stortinget bør rette opp pensjonsfeilen. VG : Verdens gang.
• Halvorsen, Elin & Pedersen, Axel West (2017). Umoderne ytelser til etterlatte? Dagbladet.
• Pedersen, Axel West (2017). Hvor går Ny AFP? Fra columbi egg til gordisk knute, til....?
• Pedersen, Axel West (2016). Likestillingsperspektiver på det norske pensjonssystemet.
• Halvorsen, Elin & Pedersen, Axel West (2016). Closing the gender gap in pensions. A microsimulation analysis of the Norwegian NDC pension system .
• Pedersen, Axel West; Dale-Olsen, Harald & Schøne, Pål (2016). Do NDC pensions increase labour supply? Evidence from the Norwegian pension reform.
• Pedersen, Axel West (2016). Disentangling the gender gap in pensions. A micro-simulation of the reformed Norwegian pension system .
• Pedersen, Axel West (2016). Trends, needs and opportunities for Research. The case for Nordic comparisons.
• Pedersen, Axel West & Halvorsen, Elin (2016). Closing the gender gap in pensions. A micro-simulation analysis of the Norwegian NDC pension system . Show summary

  In this paper we use an advanced micro-simulation model to study the distributional effects of the reformed Norwegian pension system with a particular focus on gender equality. The reformed Norwegian system is based on the NDC-formula with fixed contribution/accrual rates over the active life-phase and with accumulated pension wealth being transformed into an annuity upon retirement. A number of redistributive components are built into the system that makes it deviate from complete actuarial fairness: a unisex annuity divisor, a ceiling on annual earnings, generous child credits, a possibility for widows/widowers to inherit pension rights from a deceased spouse, a targeted guarantee pensions with higher benefit rates to single pensioners compared to married/cohabitating pensioners, and finally the tax system that is particularly progressive in its treatment of pensioners and pension income. Taking complete actuarial fairness as the point of departure, we conduct a stepwise analysis to investigate how these different components of the National Insurance pension system impact on the gender gap in pensions and on general (Gini) inequality in the distribution of pension income within a cohort of pensioners. Our analysis deviates from previous studies by concentrating on one birth cohort – all people born in 1963 – and by looking at three different outcomes: the distribution of annual pensions early in retirement (at age 70), the distribution of the total sum of pension benefits received over retirement, and the distribution of the average annual pension benefits received over the retirement phase. In addition we look at three alternative income concepts: personal income, equivalised household income, and finally an original income concept developed for this study: personal income adjusted for the economies of scale enjoyed by couple households.

• Pedersen, Axel West (2016). The Swedish pension reform. Just how bad is it? Comments from a Norwegian macro perspective.
• Pedersen, Axel West & Halvorsen, Elin (2016). Closing the gender gap in pensions. A micro-simulation analysis of the reformed Norwegian pension system . Show summary

  In this paper we use an advanced micro-simulation model to study the distributional effects of the reformed Norwegian pension system with a particular focus on gender equality. The reformed Norwegian system is based on the NDC-formula with fixed contribution/accrual rates over the active life-phase and with accumulated pension wealth being transformed into an annuity upon retirement. A number of redistributive components are built into the system that makes it deviate from complete actuarial fairness: a unisex annuity divisor, a ceiling on annual earnings, the granting of generous child credits, a possibility for widows/widowers to inherit pension rights from a deceased spouse, a targeted guarantee pensions with higher benefit rates to single pensioners compared to married/cohabitating pensioners, and finally the tax system that is particularly progressive in its treatment of pensioners and pension income. Taking complete actuarial neutrality as the point of departure, we conduct a stepwise analysis to investigate how these different components of the system impact on the gender gap in pensions and on general (Gini) inequality in the distribution of pension income within a cohort of pensioners. Our analysis deviates from previous studies by concentrating on one birth cohort – all people born in 1963 – and by looking at three different outcomes: the distribution of annual pensions early in retirement (at age 70), the distribution of the total sum of pension benefits received over retirement, and the distribution of the average annual pension benefits received over the retirement phase. In addition we look at three different income concepts: personal income, equivalized household income, and finally an original income concept developed for this study: personal income adjusted for the economies of scale enjoyed by couple households.

• Dale-Olsen, Harald; Pedersen, Axel West & Schøne, Pål (2016). Do NDC pensions increase labour supply? Evidence from the Norwegian pension reform. Show summary

  Over the last decades a number of countries have replacing traditional social insurance schemes with Notional Defined Contribution (NDC) schemes in efforts to improve the economic sustainability of national pension systems. NDC-schemes ensure a direct and highly transparent link between lifetime earnings/contributions and expected old age benefits. This link is in turn assumed to have significant positive effect on labour supply over the entire adult, pre-retirement life course. It allows pension contributions to be viewed as a form of forced savings, and therefore they should not contribute to the tax wedge for individuals who care about their income situation in retirement. In this paper we utilize the variation caused by the Norwegian pension reform of 2011 to look for evidence of labour supply responses to the new closer and more transparent link between earnings and pension-rights. The reformed system operates with a ceiling on the accrual of pension rights at annual earnings equal to NOK 640,000 which corresponds to roughly 1.3 times the average full-time wage. Due to the ceiling, the marginal accrual of pension rights in the new system is abruptly reduced from 18.1 percent to zero at this point on the earnings-schedule. If individuals are forward-looking and have a subjective discount rate equal to the implicit rate of return in the pension system, the ceiling should have an equivalent effect of a hike in the marginal tax-rate of 18.1 percent. We follow the standard approaches from research on the effects of taxation (ETI-approach) and use this non-linearity in the (implicit) tax-schedule to look for traces of behavioural responses to the new system of pension accrual. We apply both standard IV regression techniques as well as a RD-design. The analysis is based on register data covering the entire population of wage earners during the period 2008- 2013 with annual earnings above the average full time wage. Our conclusions are mixed. While we observe that the labour supply of both men and women are sensitive to changes in compound marginal tax rates, we find no bunching around the kink point at the social security ceiling and only weak evidence of reduced earnings growth in the interval just above the ceiling after 2011.

• Pedersen, Axel West (2016). Underregulering av løpende pensjon og avkortning av pensjon for gifte/samboende. Bakgrunn og politiske alternativer.
• Pedersen, Axel West (2016). Arv av pensjonsrettigheter mellom ektefeller. Noen synspunkter og resultater fra pågående forskning .
• Pedersen, Axel West (2016). Utviklingen i ekteskapsmønstre blant etniske minoriteter i Norge og Danmark. Har den danske 24-års regelen faktisk virket? .
• Pedersen, Axel West (2016). Mot et kvinnevennlig pensjonssystem?
• Pedersen, Axel West (2015). Kommentar til rapport om offentlig tjenestepensjon.
• Pedersen, Axel West (2015). Det svenske pensjonssystemet fra et nordisk perspektiv.
• Pedersen, Axel West (2015). Insentivstruktur og fordelingsvirkninger i et kjønnsperspektiv.
• Pedersen, Axel West (2015). Veivalg for offentlig tjenestepensjon. Noen innspill fra sidelinjen.
• Pedersen, Axel West (2015). Tjenestepensjon i et likestillingsperspektiv.
• Pedersen, Axel West (2015). Det svenske pensjonssystemet. Hvorfor brutalt sett fra Norge?

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