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Prepared by Csaba Feher, Ioannis Halikias, and Jules Tapsoba.
Under our assumptions and the current indexation formula, the expected pension growth over the long run is estimated at 0.4*2% + 0.6*3.5% = 2.9 percentage points. Full price indexation would thus result, over the long run, in pension growth equal to inflation (2 percent).
In OECD countries, except Germany, early retirement deductions range between 0.4-0.6 percent per month.
Workers can pay up to two years’ worth of extra contributions at the time of retirement, effectively purchasing service time ex-post.
The combined effect takes into account the impact on tax revenue of lower pension benefits relative to the baseline (due to the reduction in the bonus and the changed indexation formula); hence, the combined impact of the three reforms is somewhat smaller than the sum of their individual impact.