Optimal Individual Choice of Contribution to Second Pillar Pension System in Lithuania
The 2013 pension reform in Lithuania forced workers to choose their level of participation to the second pillar system. Three options were given - a lower contribution rate, a higher contribution rate with governmental subsidy, and to exit from the second pillar system. The aim of this article is to evaluate the best rational choice for individuals of different gender and age, depending on the expected financial returns of their second pillar accounts. Results reveal that the participation in the second pillar system is always more convenient than the abandonment, even under the conservative hypothesis of zero real rate of return. Because of the governmental subsidy, the higher contribution rate can be the best choice for young and middle-aged workers, and its convenience increases with higher expected returns.
|Date of creation:||2014|
|Contact details of provider:|| Postal: Via S. Giorgio 12, I-09124 Cagliari|
Web page: http://www.crenos.unica.it/
More information through EDIRC
References listed on IDEAS
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.:
- Ab O, G. & Mahieu, G. & Patxot, C., 2004.
"On the optimality of PAYG pension systems in an endogenous fertility setting,"
Journal of Pension Economics and Finance,
Cambridge University Press, vol. 3(01), pages 35-62, March.
- G. ABIO & Géraldine MAHIEU & C. Patxot, 2002. "On the Optimality of PAYG Pension Systems in an Endogenous Fertility Setting," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002006, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- G. Abío & Geraldine Mahieu & Cio Patxot, 2003. "On the Optimality of PAYG Pension Systems in an Endogenous Fertility Setting," CESifo Working Paper Series 1050, CESifo Group Munich.
- Colombo, Luigi & Haberman, Steven, 2005. "Optimal contributions in a defined benefit pension scheme with stochastic new entrants," Insurance: Mathematics and Economics, Elsevier, vol. 37(2), pages 335-354, October.
- Olivieri, Annamaria & Pitacco, Ermanno, 2003. "Solvency requirements for pension annuities," Journal of Pension Economics and Finance, Cambridge University Press, vol. 2(02), pages 127-157, July.
- Carlo Bianchi & Marzia Romanelli & Pietro A. Vagliasindi, 2003. "Microsimulating the Evolution of Italian Pension Benefits: the Role of Retirement Choices and Lowest Pensions Indexing," LABOUR, CEIS, vol. 17(SpecialIs), pages 139-173, 08.
- Haberman, Steven, 1997. "Stochastic investment returns and contribution rate risk in a defined benefit pension scheme," Insurance: Mathematics and Economics, Elsevier, vol. 19(2), pages 127-139, April.
- Devolder, Pierre & Melis, Roberta, 2015. "Optimal Mix between Pay As You Go and Funding for Pension Liabilities in a Stochastic Framework," ASTIN Bulletin: The Journal of the International Actuarial Association, Cambridge University Press, vol. 45(03), pages 551-575, September.
- Angrisani, M., Attias, A., Bianchi, S. & Varga, Z., 2004. "Demographic dynamics for the pay-as-you-go pension system," Pure Mathematics and Applications, Department of Mathematics, Corvinus University of Budapest, vol. 15(4), pages 357-374.
- Pitacco, Ermanno, 2004. "Survival models in a dynamic context: a survey," Insurance: Mathematics and Economics, Elsevier, vol. 35(2), pages 279-298, October.
- Hyndman, Rob J. & Booth, Heather, 2008. "Stochastic population forecasts using functional data models for mortality, fertility and migration," International Journal of Forecasting, Elsevier, vol. 24(3), pages 323-342.
- Rob J Hyndman & Heather Booth, 2006. "Stochastic population forecasts using functional data models for mortality, fertility and migration," Monash Econometrics and Business Statistics Working Papers 14/06, Monash University, Department of Econometrics and Business Statistics.
- John C. Cox & Jonathan E. Ingersoll Jr. & Stephen A. Ross, 2005. "A Theory Of The Term Structure Of Interest Rates," World Scientific Book Chapters,in: Theory Of Valuation, chapter 5, pages 129-164 World Scientific Publishing Co. Pte. Ltd..
- Cox, John C & Ingersoll, Jonathan E, Jr & Ross, Stephen A, 1985. "A Theory of the Term Structure of Interest Rates," Econometrica, Econometric Society, vol. 53(2), pages 385-407, March.
- Yijia Lin & Samuel H. Cox, 2005. "Securitization of Mortality Risks in Life Annuities," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 72(2), pages 227-252.
- A. Fiori Maccioni & A. Bitinas, 2013. "Lithuanian pension system's reforms following demographic and social transitions," Working Paper CRENoS 201315, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
- Olivieri, Annamaria, 2001. "Uncertainty in mortality projections: an actuarial perspective," Insurance: Mathematics and Economics, Elsevier, vol. 29(2), pages 231-245, October.
- A. Roger Thatcher & Väinö Kannisto & Kirill F. Andreev, 2002. "The Survivor Ratio Method for Estimating Numbers at High Ages," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 6(1), pages 1-18, January.
- Cairns, Andrew J. G. & Parker, Gary, 1997. "Stochastic pension fund modelling," Insurance: Mathematics and Economics, Elsevier, vol. 21(1), pages 43-79, October. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:cns:cnscwp:201402. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Antonello Pau)
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.