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Vito has received funding from the Network for Studies on Aging and Retirement (Netspar, 2022-2025) to undertake a research project entitled "Pension Systems (Un)sustainability and Fiscal Constraints: A Comparative Analysis." 

The project evaluates the sustainability of the state pension systems of major advanced economies using a multi-period overlapping generations (OLG) model. 

The analysis takes a macroeconomic perspective and the aim is to provide empirical evidence on fiscal limits and the sustainability of the pension systems in the ten largest EU countries (Austria, Belgium, Finland, France, Germany, Italy, Ireland, Netherlands, Portugal, Spain), the United Kingdom and the United States. 

The model is calibrated to match key aggregate moments of the economy and fiscal sector in each country up to the pre-pandemic period (2019), conditional on the demographic structure and the pension system regulatory framework. The latter includes (i) the replacement ratio of pensions, (ii) the age of mandatory retirement, (iii) the regulations for early retirement and (iv) the rules determining the social security tax rate and base. We use this initial calibration to quantify the maximum amount of pension expenditure that each country can sustain (i.e. its pension limit), the pension space and the probability of reaching the pension limit by 2020. We then undertake two types of simulation exercises. The first looks at how pension limits are likely to evolve over the next thirty years, given the demographic projections of the United Nations up until 2050. The second considers how a number of often-advocated reforms of the pension system would impact on pension limits and the welfare in each country. 

The project will provide a key analytical component of the Netspar research agenda which is to evaluate the adequacy and resilience of national pension systems, including that of the Netherlands.