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Stabilizing pay-as-you-go pension schemes in the face of rising longevity and falling fertility: an application to the Netherlands


  • Willem Heeringa
  • A.L. Bovenberg


Rising longevity and falling fertility threaten the sustainability of pay-as-you-go pension schemes. This paper shows that maintaining the intergenerational balance in the Dutch pay-as-you-go pension scheme in the face of increased longevity since the introduction of the scheme in 1957 would have required a gradual increase of the retirement age to at least 68 years for the generation born in 1945. Furthermore, we show that projected increases in labour-force participation rates do not generate sufficient additional tax revenues to subsitute for the dearth of human capital caused by falling fertility rates.

Suggested Citation

  • Willem Heeringa & A.L. Bovenberg, 2009. "Stabilizing pay-as-you-go pension schemes in the face of rising longevity and falling fertility: an application to the Netherlands," DNB Working Papers 220, Netherlands Central Bank, Research Department.
  • Handle: RePEc:dnb:dnbwpp:220

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    References listed on IDEAS

    1. John B. Shoven & Gopi Shah Goda, 2010. "Adjusting Government Policies for Age Inflation," NBER Chapters,in: Demography and the Economy, pages 143-162 National Bureau of Economic Research, Inc.
    2. David Cutler & Ellen Meara, 2001. "Changes in the Age Distribution of Mortality Over the 20th Century," NBER Working Papers 8556, National Bureau of Economic Research, Inc.
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    More about this item


    public pension; pay-as-you-go system;

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies


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