1. Luxembourgs experience in compiling the ESA 2010 supplementary table on pension entitlements John HAAS WORKSHOP ON PENSIONS 22-24 April 2013 Canberra - Australia

2. ESA 2010 is a regulation... which is: Heaven Institutional cooperation Clear methodological choices made Extensive guidance and interpretation by Eurostat Comparability across EU Compulsory methods and transmission program Hell Administrative uses hinder application of better solutions Comparability issues may bloc search for optimal solutions Slow (and ever slower) procedures 2

3. Main hypotheses of model For pensioners Life expectancy EuroPop tables Indexation to: Prices échelle mobile (hypo: 2%) Real wages ajustement (hypo: 1.5%) For current workers Average age of retirement 60 Probability of not reaching age of retirement 3

4. This is well reflected for the pensions issue Extensive preparation Eurostat/ECB Task Force 2009 Workshop by Eurostat/ECB Guidance handbook Pilot compilation exercise Looooooooong negociations at Council level Fear over political implications of possible wrong interpretation Compulsory delivery only from 2017 on at t+24 deadline only Publication not yet fully assured 4

5. Luxembourg pension system in a nutsshell General scheme = define benefit (pay as you go) Formula: flat rate + wages + length of career Exception = 3 special schemes Civil servants 2 public corporations BUT: harmonized by 2001 reform Coverage = old age, survivors, disability, early retirement Automatic adjustment Price changes (recent modulation) Real wage increases 5

6. Work on supplementary table Pilot exercise on supplementary table Presentation at Eurostat/ECB workshop in April 2009 Update after Collaboration with IGSS (Social Security) Special statistical unit has Actuarial model Corresponds well to ADL / PBO options Coherence with Ageing Working Group assumptions Very detailed individual data set (Data Warehouse) Every single pensioner covered Almost every single active person covered 6

7. Indexation of pensions: is this PBO? There is an adjustment for real wages Automatic every 2 years BUT: there is no simulation of careers of current workers ESA 2010 § 17.177... the choice of an ABO or PBO approach be based on the underlying benefit formula in the pension scheme. Where this formula includes implicitly or explicitly a factor for wage increases (before or after retirement) then a PBO approach is followed. Where such a factor is not present, an ABO approach is used. Thus our calculation should be PBO 7

8. Provisional results for table 29 Column H (Social security pension schemes) 315% of GDP in 2008 Column G (Defined benefit schemes classified in general government) 57% of GDP in 2008 Other columns?? (Non general government managed pension schemes) Work on-going Should be relatively small (general scheme = very generous) 8

9. Future work Do another update of pilot exercise table More detailed data from IGSS to feel impact of hypotheses Filling in the data for supplementary pension schemes manages by non-general government units Supervisory authority (social security – IGSS) contacted Plan to do voluntary transmission of table 29 in September 2014 Not wait till 2017 9

10. QUESTIONS? Thank you for your attention 10