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Net Pension Liabilities, Intergenerational Equity, and Pension Reforms


  • Oshio, Takashi


This paper examines an ideal pension system that would prevent an increase in net pension liabilities and redress intergenerational inequalities. The direction of pension system reform that this paper proposes is to limit the amount of pension benefits to the sum of premiums, state contributions, and yields on investment of reserves, and also to minimize the burden on the insured of premium payments. This reform would have roughly the same effect as a switchover to a funded system. It will be, however, no easy task to carry out this kind of reform, because the reform requires a politically unacceptable step: to request those generations already receiving pensions and those who have paid pension premiums to accept reductions in the amount of pension that the government has pledged to pay. One possible means to deal with this problem is to withdraw the reserve funds, which are now over 100 trillion yen. However, withdrawal of the reserves would reduce the opportunity of future generations to use the funds and yields on investment of the funds. Any attempt to reform the pension system will cause conflicts of interests between generations. This is why the government should positively disclose the outlook for its pension finance, mainly net pension liabilities, and information about intergenerational disparities to provide the public with data for objective discussions on a more desirable form of public pension.

Suggested Citation

  • Oshio, Takashi, 2002. "Net Pension Liabilities, Intergenerational Equity, and Pension Reforms," Discussion Paper 131, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hit:piedp1:131

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    References listed on IDEAS

    1. Walter Bossert & Yves Sprumont & Kotaro Suzumura, 2005. "Consistent Rationalizability," Economica, London School of Economics and Political Science, vol. 72(286), pages 185-200, May.
    2. Amartya Sen, 1997. "Maximization and the Act of Choice," Econometrica, Econometric Society, vol. 65(4), pages 745-780, July.
    3. Suzumura, Kotaro, 1977. "Houthakker's axiom in the theory of rational choice," Journal of Economic Theory, Elsevier, vol. 14(2), pages 284-290, April.
    4. Walter Bossert & Yves Sprumont & Kotaro Suzumura, 2006. "Rationalizability of choice functions on general domains without full transitivity," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 27(3), pages 435-458, December.
    5. Sen, Amartya K, 1977. "Social Choice Theory: A Re-examination," Econometrica, Econometric Society, vol. 45(1), pages 53-89, January.
    6. Amartya K. Sen, 1971. "Choice Functions and Revealed Preference," Review of Economic Studies, Oxford University Press, vol. 38(3), pages 307-317.
    7. Schwartz, Thomas, 1976. "Choice functions, "rationality" conditions, and variations on the weak axiom of revealed preference," Journal of Economic Theory, Elsevier, vol. 13(3), pages 414-427, December.
    8. Suzumura, Kataro, 1976. "Remarks on the Theory of Collective Choice," Economica, London School of Economics and Political Science, vol. 43(172), pages 381-390, November.
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    Cited by:

    1. Giang, Thanh Long, 2004. "The Pension Scheme in Vietnam: Current Status and Challenges in an Aging Society," MPRA Paper 969, University Library of Munich, Germany.

    More about this item


    net pension liabilities; intergenerational equity;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household


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