Lifetime income redistribution by social security.

Area of Science:

• Socioeconomics
• Public Policy
• Social Security Analysis

Background:

• The redistributive impact of social security systems is a key concern for economic policy.
• Understanding lifetime net benefits is crucial for assessing the fairness of social security.
• Previous assumptions suggested flat-rated schemes are inherently more redistributive than wage-related ones.

Purpose of the Study:

• To analyze the redistributive impact of the Dutch social security system on a lifetime basis.
• To compare the redistributive effects of different components: social insurances, occupational pensions, and social assistance.
• To evaluate whether flat-rated schemes are indeed more redistributive than wage-related schemes in the Dutch context.

Main Methods:

• Lifetime benefit analysis of the Dutch social security system.
• Comparative assessment of redistributive effects across different insurance types (flat-rated general vs. wage-related employee).
• Evaluation of income equalization effects of social insurances, occupational pensions, and social assistance.

Main Results:

• Positive net benefits from the Dutch social security system are observed for birth generations up to 1960.
• Social insurances show a declining net benefit trend over time, while occupational pensions exhibit an increasing trend.
• Contrary to general assumptions, flat-rated general insurances do not significantly differ in redistributive impact from wage-related employee insurances on a lifetime basis.
• Social assistance schemes demonstrate a substantial redistributive effect despite small benefit amounts.
• Social insurances and social assistance schemes contribute to income equalization.
• Occupational pensions are found to increase income inequality.

Conclusions:

• The Dutch social security system's redistributive impact varies across different components and generations.
• Lifetime analysis reveals nuanced redistributive effects, challenging some conventional assumptions about flat-rated vs. wage-related schemes.
• While social insurances and assistance promote income equality, occupational pensions exacerbate income inequality, necessitating policy consideration.