Calculating savings due to raising the statutory pension age
Budget savings achieved in a given year through raising of the AOW pension entitlement age relative to the age of 65 years are calculated as follows: the amount saved based on the number of AOW benefits which do not need to be paid that year as people become entitled at a later stage (or pass away) in a subsequent year is added to the savings achieved by having people start their benefit entitlement later on in the same year (i.e. for fewer months). The amount saved on new recipients having fewer months of AOW entitlement that year depends on the month in which they become entitled. For instance, new recipients who became entitled as of 1 April 2017 received three months less in 2017 (and six months less in 2016); new recipients with entitlement as of 1 October 2017 received 9 months less in 2017. Among the group who no longer became entitled in 2017, there are people who turned 65 on 1 April 2017 and who missed 9 months of AOW benefit that year; and there are people who turned 65 on 1 December 2017 and only missed one month that year (plus eleven months in 2018).
The amount of AOW benefit used in the calculation over a given year is determined by dividing total expenditure on AOW benefits by the average number of recipients in that year. A minor adjustment is made to take demographic characteristics of the influx (new recipients) into account. For example, new AOW benefit recipients are more likely to have a partner than older benefit recipients (whose partner has passed away). Single AOW benefit recipients receive a higher benefit than recipients with a partner.
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