A Case for Partial Funding of Pensions with an Application to the EU Candidate Countries
The paper examines the effects of ageing and makes a case for partial pre-funding of pensions. The argument is based on inter-generational fairness in a situation where pension expenditure as compared to wages increases due to low fertility and increasing longevity. We illustrate the approach by using data representing a typical EU Candidate Country of Central and Eastern Europe with a relatively high pension replacement rate. Pre-funding can take place within the public sector or in a privatised second pillar. We emphasise the need for a consistent framework to cover the many different institutional options available for pension financing.
|Date of creation:||2001|
|Date of revision:|
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- Lassila, Jukka & Valkonen, Tarmo, 2000.
"Pension Prefunding, Ageing, and Demographic Uncertainty,"
741, The Research Institute of the Finnish Economy.
- Jukka Lassila & Tarmo Valkonen, 2001. "Pension Prefunding, Ageing, and Demographic Uncertainty," International Tax and Public Finance, Springer, vol. 8(4), pages 573-593, August.
- Robin Brooks, 2000. "What Will Happen To Financial Markets When The Baby Boomers Retire?," Computing in Economics and Finance 2000 92, Society for Computational Economics.
- N. A. Barr, 2000. "Reforming Pensions; Myths, Truths, and Policy Choices," IMF Working Papers 00/139, International Monetary Fund.
- Feldstein, Martin & Liebman, Jeffrey B., 2002.
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324
- Sinn, Hans-Werner, 1997.
"The Value of Children and Immigrants in a Pay-As-You-Go Pension System: A Proposal For a Partial Transition to a Funded System,"
CEPR Discussion Papers
1734, C.E.P.R. Discussion Papers.
- Hans-Werner Sinn, 1997. "The Value of Children and Immigrants in a Pay-As-You-Go Pension System: A Proposal for a Partial Transition to a Funded System," NBER Working Papers 6229, National Bureau of Economic Research, Inc.
- Sheetal K. Chand & Albert Jaeger, 1996. "Aging Populations and Public Pension Schemes," IMF Occasional Papers 147, International Monetary Fund.
- Jukka Lassila & Tarmo Valkonen, 2002. "Prefunding in a Defined Benefit Pension System: The Finnish Case," NBER Chapters, in: Social Security Pension Reform in Europe, pages 263-290 National Bureau of Economic Research, Inc.
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