Dag van de Sociologie location:Leuven date:29 mei 2008
The Belgian federal government has introduced a 'pension bouns', additional pension benefit to those of 62 and older who postpone retirement. In this paper, the effect of this pension bonus is simulated using a Micro-Economic Pension model (MEP). A first conclusion is that the pension bonus will indeed decrease the implicit tax on working longer, and might therefore encourage workers to postpone retirement and remain in the labour market. Furthermore, it seems to be designed in such a way that the effect of the pension bonus is the strongest for those with the lowest pension benefit; women and blue-collar workers. Finally, the paper argues that the marginal effect of a constant pension bonus is decreasing. An increasing pension bonus with age could overcome this, and might therefore even be more effective in keeping older workers in the labour market.