The impact of ageing population on pay-as-you-go pension systems: The case of Luxembourg

peer reviewed ; Financing of the Luxembourg pension system is based on a pay-as-you-go system and hence on an intergenerational contract. As is the case for most other European countries, this system will be exposed to the effects of demographic aging over the coming decades. The aim of this paper is to evaluate the impact of this demographic deficit on the long term sustainability of the Luxembourg pension system. We proceed in two steps. In a first step, we highlight the evolution of salaries in Luxembourg. To this end, we use the recent statistical group based trajectory model of D. Nagin (... Mehr ...