Addressing the Legacy Costs in an NDC Reform: Conceptualization, Measurement, Financing
AbstractThe paper provides a framework for the conceptualization, definition and estimation of legacy costs that need to be addressed in a reform that transforms an unfunded defined contribution (NDB) scheme into a notional (or non-financial) defined contribution (NDC) scheme. As the new contribution rate is fixed and, perhaps, reduced, paying for the accrued to date liabilities leaves a financing gap that needs to be estimated and financed, best outside the pension system if a less distorting financing form is available. The paper illustrates the proposed measurement approach with broad estimates under a hypothetical NDC reform in China.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5296.
Length: 24 pages
Date of creation: Oct 2010
Date of revision:
Publication status: published in: Edward Palmer, Robert Holzmann and David Robalino, Nonfinancial Defined Contribution Pension Schemes in a Changing Pension World: Volume 2, Gender, Politics, and Financial Stability, World Bank, 2013, 277-304
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Find related papers by JEL classification:
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
This paper has been announced in the following NEP Reports:
- NEP-AGE-2010-11-20 (Economics of Ageing)
- NEP-ALL-2010-11-20 (All new papers)
- NEP-PUB-2010-11-20 (Public Finance)
- NEP-TRA-2010-11-20 (Transition Economics)
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.:
- Robalino, David A. & Bodor, András, 2009.
"On the financial sustainability of earnings-related pension schemes with ‘pay-as-you-go’ financing and the role of government-indexed bonds,"
Journal of Pension Economics and Finance, Cambridge University Press,
Cambridge University Press, vol. 8(02), pages 153-187, April.
- Robalino, David A. & Bodor, Andras, 2006. "On the financial sustainability of earnings-related pension schemes with"pay-as-you-go"financing and the role of government indexed bonds," Policy Research Working Paper Series, The World Bank 3966, The World Bank.
- Robert Holzmann, 1997. "Fiscal Alternatives of Moving from Unfunded to Funded Pensions," OECD Development Centre Working Papers, OECD Publishing 126, OECD Publishing.
- Holzmann, Robert & Palacios, Robert & Zviniene, Asta, 2004. "Implicit pension debt: issues, measurement and scope in international perspective," Social Protection Discussion Papers 30153, The World Bank.
- Holzmann, Robert, 1998. "Financing the transition to multipillar," Social Protection Discussion Papers 20052, The World Bank.
- Sebastian Galiani & Paul Gertler & Rosangela Bando, 2014.
NBER Working Papers
19775, National Bureau of Economic Research, Inc.
- Takayama, Noriyuki, 2013. "Intergenerational Equity and the Gender Gap in Pension Issues," CIS Discussion paper series, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University 605, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
- Eduardo Fajnzylber & David Robalino, 2010. "Assessing Fiscal Costs and the Distribution of Pensions in Transitions to FDC and NDC Systems: A Retrospective Analysis for Chile," Working Papers, Adolfo IbÃ¡Ã±ez University, School of Government wp_005, Adolfo Ibáñez University, School of Government.
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