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Is an Increase in the Minimum Retirement Age Always Desirable? The Case of Notional Defined Contribution Systems

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  • Riccardo Magnani

    (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)

Abstract

Several countries have recently introduced reforms that aim to increase the neutrality of their pension system by introducing an incentives-disincentives mechanism or by replacing their traditional defined-benefit system with a Notional Defined Contribution method. This paper evaluates the financial effects of an increase in the minimum retirement age in countries where a Notional Defined Contribution system exists. We show that such a reform produces a positive effect on the financial situation of the pension system (by generating surpluses or by reducing deficits) in the short and in the medium run, but it becomes completely ineffective in the long run. This result implies that in countries where the pension system is sufficiently neutral such a reform is not appropriate to solve the problem of population ageing which is a long-run problem.

Suggested Citation

  • Riccardo Magnani, 2016. "Is an Increase in the Minimum Retirement Age Always Desirable? The Case of Notional Defined Contribution Systems," Post-Print hal-01362459, HAL.
    • Handle: RePEc:hal:journl:hal-01362459
    DOI: 10.1111/meca.12113
    Note: View the original document on HAL open archive server: https://hal.science/hal-01362459
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    References listed on IDEAS

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    Cited by:

    1. Mauro Visaggio, 2019. "Extending the retirement age for preserving the costitutive pension system mission," Public Finance Research Papers 40, Istituto di Economia e Finanza, DSGE, Sapienza University of Rome.

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    Keywords

    Pension finance; Retirement policies; Notional Defined Contribution systems; Minimum retirement age; Population ageing ; Pension economics;
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