Ageing Populations and Intergenerational Risk-sharing in PAYG Pension Schemes
AbstractThe purpose of this paper is to compare pension schemes with respect to their intergenerational redistributive effects caused by economic and demographic changes. It is shown how these effects depend on the specific design of the pension scheme, with special attention devoted to the indexation problem. There is a potential trade-off between financial stability of the pension system and a “desired” distribution between generations. A buffer fund is often seen as the remedy to demographic strain and potential conflict. Therefore, the possibility of accumulating (and de-cumulating) a buffer fund is included. A lifecycle perspective is applied and the risk-sharing is measured by different generations’ rate of return. The analysis is carried out within the framework of an over-lapping generation model in the setting of a stylised economy.
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Bibliographic InfoPaper provided by Lund University, Department of Economics in its series Working Papers with number 2002:18.
Length: 21 pages
Date of creation: 02 Jul 2002
Date of revision:
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Notional defined contribution pension systems; demographic changes; indexing; intergenerational risk-sharing;
Find related papers by JEL classification:
- D30 - Microeconomics - - Distribution - - - General
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
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