This sensitivity involves testing an alternative bequest motive specification where the implicit weight is fixed (that is, it does not decrease as life expectancies increase). This leads to households retiring much later under the revised base case (as wealth increases over time), which in turn results in a smaller fiscal and participation effect associated with an increase in the preservation age (as there are fewer household who are affected) (table 6.12). Table 6.12 SA8 results in 2055 Source: Commission estimates. SA9: Minimum and maximum sensitivity cases The scenario captures the cumulative effect of multiple low/high ‘minimum/maximum’ sensitivity analysis scenarios. The case scenario includes the ‘minimum’ ‘lower returns’ assumptions from SA1, and the parameter set assumptions from SA2. The ‘alternative 1’ case scenario includes the assumptions from SA1, and the ‘maximum’ ‘higher returns’ parameter set assumptions from SA2. ‘alternative 2’ The results for these sensitivity analysis scenarios suggest that the effect on mature age participation rates in 2055 of a delayed increase in the preservation age is somewhere between 0.8 and 3.8 percentage points, and the effect on the net fiscal government’s balance is somewhere between $2.9 billion and $11.6 billion in 2015 prices (this excludes the effect of assumptions that cannot be readily tested). Table 6.13 SA9 results in 2055: minimum and maximum sensitivity cases Source: Commission estimates.
This sensitivity involves testing an alternative bequest motive specification where the implicit weight is fixed (that is, it does not decrease as life expectancies increase). This leads to households retiring much later under the revised base case (as wealth increases over time), which in turn results in a smaller fiscal and participation effect associated with an increase in the preservation age (as there are fewer household who are affected) (table 6.12). Table 6.12 SA8 results in 2055 Source: Commission estimates. SA9: Minimum and maximum sensitivity cases The ‘minimum/maximum’ scenario captures the cumulative effect of multiple low/high sensitivity analysis scenarios. The ‘minimum’ case scenario includes the ‘lower returns’ assumptions from SA1, and the ‘alternative parameter set 1’ assumptions from SA2. The ‘maximum’ case scenario includes the ‘higher returns’ assumptions from SA1, and the ‘alternative parameter set 2’ assumptions from SA2. The results for these sensitivity analysis scenarios suggest that the effect on mature age participation rates in 2055 of a delayed increase in the preservation age is somewhere between 0.8 and 3.8 percentage points, and the effect on the government’s net fiscal balance is somewhere between $2.9 billion and $11.6 billion in 2015 prices (this excludes the effect of assumptions that cannot be readily tested). Table 6.13 SA9 results in 2055: minimum and maximum sensitivity cases Source: Commission estimates.