Generational Accounting, Solidarity and Pension Losses
AbstractThe creeping stock market collapse eroded the wealth of funded pension systems. This led to political tensions between generations due to the fuzzy definition of property rights on the pension funds wealth. We argue that this problem can best be resolved by the introduction of generational accounts. Using modern portfolio and consumption planning theory we show that the younger generations should have the higher equity exposure due to their human capital. Capital losses should be distributed smoothly over lifetime consumption. When stock markets are depressed equity should be bought, savings and consumption should be scaled down equiproportionally, and retirement should be postponed. Portfolio investment restrictions are quite costly.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Springer in its journal De Economist.
Volume (Year): 154 (2006)
Issue (Month): 1 (03)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100260
Pension funds; generational accounts; portfolio choice; Life cycle Models; D91; G11; G23;
Other versions of this item:
- Teulings, Coen & de Vries, Casper G., 2003. "Generational Accounting, Solidarity and Pension Losses," IZA Discussion Papers 961, Institute for the Study of Labor (IZA).
- Coen N. Teulings & Casper G. de Vries, 2003. "Generational Accounting, Solidarity and Pension Losses," Tinbergen Institute Discussion Papers 03-094/3, Tinbergen Institute.
- de Vries, Casper G & Teulings, Coen N, 2004. "Generational Accounting, Solidarity and Pension Losses," CEPR Discussion Papers 4209, C.E.P.R. Discussion Papers.
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- G2 - Financial Economics - - Financial Institutions and Services
- G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
- J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Zvi Bodie & Robert C. Merton & William F. Samuelson, 1992.
"Labor Supply Flexibility and Portfolio Choice in a Life-Cycle Model,"
NBER Working Papers
3954, National Bureau of Economic Research, Inc.
- Bodie, Zvi & Merton, Robert C. & Samuelson, William F., 1992. "Labor supply flexibility and portfolio choice in a life cycle model," Journal of Economic Dynamics and Control, Elsevier, vol. 16(3-4), pages 427-449.
- Caballero, R.J., 1988.
"Consumption Puzzles And Precautionary Savings,"
1988_05, Columbia University, Department of Economics.
- Hendricks, Ken & Judd, Ken & Kovenock, Dan, 1980. "A note on the core of the overlapping generations model," Economics Letters, Elsevier, vol. 6(2), pages 95-97.
- Jacob A. Bikker & Dirk W.G.A. Broeders & David A. Hollanders & Eduard H.M. Ponds, 2009.
"Pension funds' asset allocation and participant age: a test of the life-cycle model,"
DNB Working Papers
223, Netherlands Central Bank, Research Department.
- Jacob A. Bikker & Dirk W. G. A. Broeders & David A. Hollanders & Eduard H. M. Ponds, 2012. "Pension Funds’ Asset Allocation and Participant Age: A Test of the Life-Cycle Model," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 79(3), pages 595-618, 09.
- J.A. Bikker & Dirk W. G. A Broeders & David A. Hollanders & Eduard H. M. Ponds, 2009. "Pension fundsâ€™ asset allocation and participant age: a test of the life-cycle model," Working Papers 09-25, Utrecht School of Economics.
- Beetsma, Roel M.W.J. & Romp, Ward E. & Vos, Siert J., 2012.
"Voluntary participation and intergenerational risk sharing in a funded pension system,"
European Economic Review,
Elsevier, vol. 56(6), pages 1310-1324.
- Roel Beetsma & Ward Romp & Siert J. Vos, 2011. "Voluntary Participation and Intergenerational Risk Sharing in a Funded Pension System," Tinbergen Institute Discussion Papers 11-056/2/DSF19, Tinbergen Institute.
- Beetsma, Roel & Romp, Ward E & Vos, Siert-Jan, 2011. "Voluntary participation and intergenerational risk sharing in a funded pension system," CEPR Discussion Papers 8312, C.E.P.R. Discussion Papers.
- Coen Teulings, 2010. "How to Share Our Risks Efficiently? Principles for Optimal Social Insurance and Pension Provision," De Economist, Springer, vol. 158(1), pages 1-21, April.
- Gumus, Erdal, 2008.
"Türk Sosyal Güvenlik Sisteminin Değerlendirilmesi ve Sosyal Güvenlik Kurumlarının Finansal Geleceği
[An Evaluation of Turkish Social Security Reform Process and Its Financial Future]," MPRA Paper 42160, University Library of Munich, Germany.
- repec:dgr:uvatin:2010128 is not listed on IDEAS
- Alessandro Bucciol & Roel M.W.J. Beetsma, 2010.
"Inter- and Intra-generational Consequences of Pension Buffer Policy under Demographic, Financial, and Economic Shocks,"
CESifo Economic Studies,
CESifo, vol. 56(3), pages 366-403, September.
- Alessandro Bucciol & Roel Beetsma, 2009. "Inter- and Intra-generational Consequences of Pension Buffer Policy under Demographic, Financial and Economic Shocks," CESifo Working Paper Series 2779, CESifo Group Munich.
- Hoevenaars, Roy P.M.M. & Ponds, Eduard H.M., 2008. "Valuation of intergenerational transfers in funded collective pension schemes," Insurance: Mathematics and Economics, Elsevier, vol. 42(2), pages 578-593, April.
- Roel Beetsma & Alessandro Bucciol, 2011.
"Differentiating Indexation in Dutch Pension Funds,"
Springer, vol. 159(3), pages 323-360, September.
- Roel M. W. J. Beetsma & Alessandro Bucciol, 2010. "Differentiating Indexation in Dutch Pension Funds," CESifo Working Paper Series 3305, CESifo Group Munich.
- Roel Beetsma & Alessandro Bucciol, 2010. "Differentiating Indexation in Dutch Pension Funds," Tinbergen Institute Discussion Papers 10-128/2, Tinbergen Institute.
- Damiaan H.J. Chen & Roel Beetsma & Eduard Ponds & Ward E. Romp, 2014. "Intergenerational Risk-Sharing through Funded Pensions and Public Debt," CESifo Working Paper Series 4624, CESifo Group Munich.
- Bovenberg, A.L. & Koijen, R.S.J. & Nijman, T.E. & Teulings, C.N., 2007. "Saving and investing over the life cycle and the role of collective pension funds," Open Access publications from Tilburg University urn:nbn:nl:ui:12-301942, Tilburg University.
- Beetsma, Roel M.W.J. & Bovenberg, A. Lans & Romp, Ward E., 2011.
"Funded pensions and intergenerational and international risk sharing in general equilibrium,"
Journal of International Money and Finance,
Elsevier, vol. 30(7), pages 1516-1534.
- Beetsma, Roel & Bovenberg, A Lans & Romp, Ward E, 2008. "Funded Pensions and Intergenerational and International Risk Sharing in General Equilibrium," CEPR Discussion Papers 7106, C.E.P.R. Discussion Papers.
- Gollier, Christian, 2007.
"Intergenerational Risk-Sharing and Risk-Taking of a Pension Fund,"
IDEI Working Papers
42, Institut d'Économie Industrielle (IDEI), Toulouse.
- Gollier, Christian, 2008. "Intergenerational risk-sharing and risk-taking of a pension fund," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1463-1485, June.
- Christian Gollier, 2007. "Intergenerational Risk-Sharing and Risk-Taking of a Pension Fund," CESifo Working Paper Series 1969, CESifo Group Munich.
- Mehlkopf, R.J., 2011. "Risk sharing with the unborn," Open Access publications from Tilburg University urn:nbn:nl:ui:12-4960700, Tilburg University.
- repec:dgr:uvatin:2011056 is not listed on IDEAS
- Lans Bovenberg & Theo Nijman, 2009. "Developments in pension reform: the case of Dutch stand-alone collective pension schemes," International Tax and Public Finance, Springer, vol. 16(4), pages 443-467, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.