Financing Retirement Payments
in the Future
in Austria: Some Scenarios

This interactive document is offering facilities to study the effects of changing the retirement age. You can only use the interactive facilities if Microsoft Excel 5.0 or higher is installed on your computer.

The key number for judging the financiability of a retirement payment system is the ratio of number of retired people and the number of people in the workforce.

Our model, however, will not use this number. Instead, we will use the age group ratio, i.e. the number of people in retirement age divided by the number of people in "workforce age".

The basic data of our model is age group data of the population of Austria according to the census of 1991. These data give us the numbers of people of age 20, 21, ... in 1991>.

Assuming that workforce entrance age is 20 and average retirement entrance age is 58 we get the number of people in the workforce by adding the numbers of people aged 20 up to 57. By adding the numbers of people aged 58 and more we get the number of people in retirement age.

This model is, however, simplistic because of the following reasons:

Therefore, our model allows to change the values of key parameters of the system. You may change workforce entrance age, retirement age, and percentage of population part of the retirement financing system separately for male and female population. You can do so by either entering varying values with the keyboard or by using the sliders.

The percentage of population in the workforce used in our model is not the same number as used in official publications. Our percentage is calculated with respect to the population in workforce age (e.g. population aged 20 to 57), in official publications the percentage is calculated with respect to the total population including children and retired people.

The result of our model calculations are presented as a table and a graph of the age group ratio for the years 1991 until 2025. The table and the graph will allow you to compare the scenarios you created by changing the model parameters with the values derived from the actual current parameters (i.e. workforce entrance age, retirement age, and percentage of people in the system).

The basic data for estimation the future age group structure come from the official life expectancy table 90/92 published by the Austrian Bureau of Census (Österreichisches Statistisches Zentralamt). This table gives age specific mortality rates. Thereby it allows, e.g., to calculate the number of people age 21 in the year 1992 based on the number of people age 20 in 1991. Using these data, and starting from the census of 1991, we can calculate reasonable predictions for the age distribution of the population in the future. From these data, we also can calculate future values of the age group ratio.

The program (i.e. the worksheet with graphs) you can download now to your computer needs Microsoft Excel 5.0)

To use the model in a convenient way you have to tell you Web browser (e.g. Netscape) that Excel should be started automatically with this worksheet. This is rather easy with the latest versions of Netscape. When you click the link connecting you to the worksheet, the Netscape will tell you that now Viewer/Helper Application has been configured for

application/x-msexcel

Then you have to click the button Configure a Viewer. On the next screen you have to tell Netscape how Excel is started on your system. To do this you can either type in the command line for starting Excel, e.g. c:\excel\excel.exe, or you can use the Browse button and dialog box to search for Excel on your hard disk anmd configure it that way.

Then Netscape will start Excel and immediately will load or model.

Our model does not claim to be complete or perfectly accurate. It does not take into account, for example, migration. It is intended to show in which direction and approximately by what amount changes in retirement age will influence the age group ratio. Another simplification contained in our model is the assumption that the percentage of population entitled retirement payments with regard to people in retirement age is considered to be equal with the percentage of people in the workforce with regard to people in workforce age. As a consequence of this assumption the model ignores the possibility that, due to changing social circumstances and improved education opportunities for females, the percentage of working females with respect to females in workforce age might be higher the percentage of females entitled to receive retirement payment with respect to females in retirement age. Additionally, to be realistic, our model also needs the birth numbers for the years 1992 to 2025. Since these numbers (naturally) are not available yet, the model uses the birth numbers from 1991 for all the following years.

You can now download the model for Excel 5 or 95 or download the model for Excel 97 and start the analysis.
The starting values for the parameters you will see when the model appears represent the current values in Austria.

We also offer a version allowing to compare the results of this model for Austria, United States, and Japan.
This workbook runs in Excel 5, Excel 95, and Excel 97.



Author: Erich Neuwirth

Special thanks to Dr. Gerhard Majce for important suggestions for improving the model. These suggestions already have been incorporated into the program.


Erich Neuwirth (erich.neuwirth@univie.ac.at) Last Change EN 971023

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