This study explores factors influencing pension fund adequacy and sustainability across 21 EU countries from 2007-2018, with a specific focus on the role of migration. Results from Bayesian and regularized linear models reveal no significant evidence that migration bolsters pension funding. Public debt and fertility negatively affect funding in new EU countries, while private debt has a positive effect. The greatest factor is a country’s socialist history. Policymakers are advised to consider strategies to integrate migrants across the EU for better pension contributions and recognize the disparities between former socialist and wealthier EU nations.
KeywordsPensionsPension AdequacyMigrationMachine LearningEU Countries
American Academy of Actuaries (2014). The 80% Pension Funding Myth. Essential Elements: Making Complex Public Policy Issues Clear. https://www.actuary.org/sites/default/files/files/Pension%20Funding.pdf
Barr, N. (2013). The Pension System in Finland: Adequacy, Sustainability and System D e sign. Ev aluation of the Finnish Pension System/Part 1. Finish Centre for Pensions. https://www.julkari.fi/bitstream/handle/10024/129172/ThepensionsysteminFinlandAdequacysustainabilityandsystemdesign.pdf?sequence=1
Blake, D. (2003). Is Immigration the Answer to the UK’s Pen sion Crisis? Discussion P a per : UB S Pensions Series 015 (465). Financial Markets Group, London School of Economics and Political Science. http://eprints.lse.ac.uk/24864/
Brank, J. et al. (2011). Feature Selection. In C. Sammat, & G. I. Webb (Eds.), Encyclopedia of Machin e Learning (pp. 402-406). Springer. https://doi.org/10.1007/978-0-387-30164-8_306
Cleveland, W. S., & Devlin, S. J. (1988). Locally Weighted Regression: An Approach to Regression Analysis by Local Fitting. Journal of the American Statistical Association, 83, 596-610. https://doi.org/10.1080/01621459.1988.10478639
Cohen, H. W. (2011). P Values: Use and Misuse in Medical Literature. American Journal of Hy pertension, 24, 18-23. https://doi.org/10.1038/ajh.2010.205
De Nederlandsche Bank (2022). P ensions: Funding Ratio. https://www.dnb.nl/en/current-economic-issues/pensions/our-present-pension-system/pensions-funding-ratio/
Dhillow, P. S., Foster, D. P., Kakade, S. M., & Ungar, L. H. (2013). A Risk Comparison of Ordinary Least Squares versus Ridge Regression. Journal of Machine Learning Re search , 13, 1505-1511.
Donoho, D. L. (2006a). Compressed Sensing. IEEE Transactions on Information Theory, 52, 1289-1306. https://doi.org/10.1109/tit.2006.871582
Eichhorst, W., Gerard, M., Kendzia, M. J., Mayrhuber, C., Nielsen, C., Rünstler, G., & Url, T. (2011). P ension Systems in the EU—Contingent Liabilities and Assets in the Public and Private Sector. IZA Research Report No. 42. http://ftp.iza.org/report_pdfs/iza_report_42.pdf
European Commission (2010). Progress and Key Challenges in the Delivery of Adequate and Susta inable Pensions in Europe. https://ec.europa.eu/economy_finance/publications/occasional_paper/2010/pdf/ocp71_en.pdf
European Commission (2015a). The 2015 Pension Adequacy Report: Current and Future Income A dequacy in Old Age in the EU, Volume I. https://ec.europa.eu/social/BlobServlet?docId=14529&langId=en
European Commission (2015b). The 2015 Pension Adequacy Report: Current and Future Income Adequacy in Old Age in the EU—Country Profiles, Volume II. https://op.europa.eu/en/publication-detail/-/publication/2a4451ef-6d06-11e5-9317-01aa75ed71a1/language-en
European Commission (2021a). The 2021 Pension Adequacy Report: Current and Future Income Ad equacy in Old Age in the EU, Volume I. https://op.europa.eu/en/publication-detail/-/publication/4ee6cadd-cd83-11eb-ac72-01aa75ed71a1
European Commission (2021b). The 2021 Pension Adequacy Report: Current and Future Income Adeq uacy in Old Age in the EU—Country Profiles, Volume II. https://op.europa.eu/en/publication-detail/-/publication/4849864a-cd83-11eb-ac72-01aa75ed71a1/language-en
Eurostat (2010). European System of A ccounts—ESA 2010. https://ec.europa.eu/eurostat/documents/3859598/5925693/KS-02-13-269-EN.PDF.pdf/44cd9d01-bc64-40e5-bd40-d17df0c69334?t=1414781932000
Eurostat (2020b). Public Debt . https://ec.europa.eu/eurostat/databrowser/view/GOV_10DD_EDPT1__custom_2483267/default/table?lang=en
Eurostat (2020c). House Pric e Index, Deflated—Annual Data. https://ec.europa.eu/eurostat/databrowser/view/TIPSHO10/default/table
Eurostat. (2020d). Unemploy ment Rate—Annual Data. https://ec.europa.eu/eurostat/databrowser/view/TIPSUN20/default/table
Grech, A. G. (2013). How Best to Measure Pension Adequacy. Centre for Analysis of Social Exclusion. London School of Economics, Case 172. http://eprints.lse.ac.uk/51270/1/__Libfile_repository_Content_Grech%2C%20AG_Grech_How_best_measure_2013.pdf
Guyon, I., & Elisseeff, A. (2003). An Introduction to Variable and Feature Selection. Journal of Machine Learn ing Research , 3, 1157-1182.
Krieger, T. (2014). Public Pensions and Immigr ation . CESifo DICE Report. https://www.ifo.de/DocDL/dicereport214-forum2.pdf
MacKay, D. J. C. (1992). Bayesian Interpolation. Neural Computation, 4, 415-447. https://doi.org/10.1162/neco.1992.4.3.415
Mallat, S. G., & Zhang, Z. F. (1993). Matching Pursuits with Time-Frequency Dictionaries. IEEE Transa ctions on Signal Processing, 41, 3397-3415. https://doi.org/10.1109/78.258082
Marquardt, D. W., & Snee, R. D. (1975). Ridge Regression in Practice. The American Sta ti s tician, 2 9, 3-20. https://doi.org/10.1080/00031305.1975.10479105
McDonald, G. C. (2009). Ridge regression. WIREs Computational Statistics, 1, 93-100. https://doi.org/10.1002/wics.14
Munz, S., & Werding, M. (2005). Public Pensions and International Migration: Some Clarifications and Illustrative Results. Journal of Pension Economics and Finance, 4, 181-207. https://doi.org/10.1017/s1474747205001988
Neal, R. M. (1996). Bayesian L earning for Neural Networks . Springer-Verlag.
Newman, T. B., & Browner, W. S. (1991). In Defense of Standardized Regression Coefficients. Epide miology, 2, 383-386. https://doi.org/10.1097/00001648-199109000-00014
OECD (2021). Pensions at a Gl ance. https://stats.oecd.org/Index.aspx?DataSetCode=PAG
Orenstein, M. A. (2011). Pension Privatization in Crisis: Death or Rebirth of a Global Policy Trend? I nternational Social Security Review, 64, 65-80. https://doi.org/10.1111/j.1468-246x.2011.01403.x
Pasanen, L., Holmström, L., & Sillanpää, M. J. (2015). Bayesian LASSO, Scale Space and Decision Making in Association Genetics. PLOS ONE, 10, e0120017. https://doi.org/10.1371/journal.pone.0120017
Poufinas, T. (2022). Role of Migration in Pension Integration within the European Union. Inte rnational Advances in Economic Research , 27, 303-319.
Richmont, L. (2019). Pension Funding Adequacy and Municipal Credit Analysis: Tec h niques for Identifying Significant Credit Risk. Public Pension Risk Series. BAM White Paper. https://buildamerica.com/wp-content/uploads/2020/05/bam-wp-pension-series-techniques-for-identifying-a-significant-credit-risk-1.pdf
Scharn, M., Sewdas, R., Boot, C. R. L., Huisman, M., Lindeboom, M., & van der Beek, A. J. (2018). Domains and Determinants of Retirement Timing: A Systematic Review of Longitudinal Studies. BMC Public Health, 18, Article No. 1083. https://doi.org/10.1186/s12889-018-5983-7
Serrano, A. S. & Peltonen, T. (2020). Pension Schemes in the European Union: Chal lenges and Imp lications from Macroeconomic and Financial Stability Perspectives. European Systemic Risk Board. https://www.esrb.europa.eu/pub/pdf/occasional/esrb.op17~554f755910.en.pdf
Smith, G., & Campbell, F. (1980). A Critique of Some Ridge Regression Methods. Journal of the Ame rican Statistical Association, 75, 74-81. https://doi.org/10.1080/01621459.1980.10477428
Sunaryo, S., Santoni, A., Endri, E., & Harahap, M. N. (2020). Determinants of Capital Adequacy Ratio for Pension Funds: A Case Study in Indonesia. International Journal of Financial Research, 11, 203-213. https://doi.org/10.5430/ijfr.v11n4p203
Surjandari, D. A., Anggraeni, D., Yulianto, Y., & Religiosa, M. W. (2019). Analysis of Determinants of Financial and Non-Financial Aspects for the Fund Adequacy Ratio (FAR) at Pension Fund Institutions. The Indonesian Accounting Review, 9, 181-193. https://doi.org/10.14414/tiar.v9i2.1839
Taubman, P. (1985). Determinants of Pension Benefits. http://www.nber.org/chapters/c7132
Thompson, C. G., Kim, R. S., Aloe, A. M., & Becker, B. J. (2017). Extracting the Variance Inflation Factor and Other Multicollinearity Diagnostics from Typical Regression Results. Basic and Applied Social Psychology, 39, 81-90. https://doi.org/10.1080/01973533.2016.1277529
Tibshirani, R. (1996). Regression Shrinkage and Selection via the Lasso. Journal of the Royal Statistical Soci ety Series B: Statistical Methodology, 58, 267-288. https://doi.org/10.1111/j.2517-6161.1996.tb02080.x
Tibshirani, R. (1997). The Lasso Method for Variable Selection in the Cox Model. Stati s tics in Me dicine, 16, 385-395. https://doi.org/10.1002/(sici)1097-0258(19970228)16:4 3.0.co;2-3
Tikhonov, A. N. (1963). Solution of Incorrectly Formulated Problems and the Regularization Method. Soviet Mathematics Doklady , 4, 501-504.
Tipping, M. E. (2001). Sparse Bayesian Learning and the Relevance Vector Machine. Jou r nal of Machine Learning Research , 1, 211-244.
Tipping, M. E., & Bishop, C. M. (1999a). Mixtures of Probabilistic Principal Component Analyzers. Neural Computation, 11, 443-482. https://doi.org/10.1162/089976699300016728
Tipping, M. E., & Bishop, C. M. (1999b). Probabilistic Principal Component Analysis. Journal of the Royal Statistical Society Series B: Statistical Methodology, 61, 611-622. https://doi.org/10.1111/1467-9868.00196
Velladics, K., Henkens, K., & van Dalen, H. P. (2006). Do Different Welfare States Engender Different Policy Preferences? Opinions on Pension Reforms in Eastern and Western Europe. Ageing and Society, 26, 475-495. https://doi.org/10.1017/s0144686x05004551
Wagner, H. (2005). Pension Reform in the New EU Member States: Will a Three-Pillar Pension System Work? Eastern European Economics, 43, 27-51. https://doi.org/10.1080/00128775.2005.11041110
Wasserstein, R. L., & Lazar, N. A. (2016). The ASA Statement on p -Values: Context, Process, and Purpose. The American Statistician, 70, 129-133. https://doi.org/10.1080/00031305.2016.1154108
Wolf, I., & Del Rio, L. C. L. (2021). Benefit Adequacy in Funded Pension Systems: Micro-Simulation of the Israeli Pension Scheme. International Journal of Economics & Business Administration , 9 , 143-164. https://doi.org/10.35808/ijeba/694
World Bank (2020a). S&P Global Equity Indices (Annual % Change). Data Bank. https://data.worldbank.org/indicator/CM.MKT.INDX.ZG
World Bank (2020b). Inflat ion, Consumer Prices (Annual %). Data Bank. https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG
World Bank (2020c). Fertility Rat e, Total ( Births p er Woman). https://data.worldbank.org/indicator/SP.DYN.TFRT.IN
World Bank (2020d). Pr ivate Debt. https://www.worldbank.org/en/home
World Bank (2020e). Population , Female (% of Total Population). https://data.worldbank.org/indicator/SP.POP.TOTL.FE.ZS
Yohane, R., Mwanza, B. G., & Chowa, T. (2022). Adequacy, Affordability and Sustainability of Pensions in Higher Learning Institutions in Zambia. Open Journal of Business and Management, 10, 2768-2789. https://doi.org/10.4236/ojbm.2022.105137