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Measuring Financial Sustainability and Social Adequacy of the Italian NDC Pension System under the COVID-19 Pandemic

Author

Listed:
  • Lorenzo Fratoni

    (Department of Statistics, Sapienza University of Rome, 00161 Rome, Italy
    These authors contributed equally to this work.)

  • Susanna Levantesi

    (Department of Statistics, Sapienza University of Rome, 00161 Rome, Italy
    These authors contributed equally to this work.)

  • Massimiliano Menzietti

    (Department of Economics, Statistics and Finance, University of Calabria, 87036 Rende, Italy
    These authors contributed equally to this work.)

Abstract

The COVID-19 pandemic is presently influencing the financial sustainability and the social adequacy of public pension schemes. In this paper, we measure the effects of COVID-19 on the Italian public pension system by introducing a deterministic shock due to the pandemic in the evolution of the variables mainly involved in the system’s evaluation. These variables, namely the unemployment rate, wage growth rate, inflation rate, and mortality rates, are modeled in a stochastic framework. Our results show that COVID-19 worsens the financial sustainability of the pension system in the short–medium term, while it does not appreciably affect social adequacy in the medium term. The Italian pension system already showed a social adequacy problem before 2020, which the pandemic does not further deteriorate essentially.

Suggested Citation

  • Lorenzo Fratoni & Susanna Levantesi & Massimiliano Menzietti, 2022. "Measuring Financial Sustainability and Social Adequacy of the Italian NDC Pension System under the COVID-19 Pandemic," Sustainability, MDPI, vol. 14(23), pages 1-23, December.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:23:p:16274-:d:994843
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    References listed on IDEAS

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