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Comparing the Robustness of PAYG Pension Schemes

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  • Falilou Fall

    (OECD)

Abstract

This paper provides a framework for comparing a defined benefit (DB) and a defined contribution (DC) point schemes, which are both pay-as-you go (PAYG) financed. Two stylised PAYG pension schemes are modelled and simulated to compare their robustness to shocks. The same demographic developments (distribution of workers by age and revenue and distribution of survival rate by age) are applied to the two schemes. The impacts of different shocks (productivity, migration and longevity) on the two schemes are compared. Different policy reforms (increasing the contribution rate, diminishing the pension benefit, changing the up-rating and increasing the retirement age) to cope with the ageing shock are analysed and compared. Une comparaison de la robustesse des systèmes de retraite en répartition Ce document fournit un cadre pour comparer des systèmes de retraite en répartition à prestations définies et à cotisations définies. Deux régimes de retraite par répartition stylisés sont modélisés et simulés pour comparer leur robustesse aux chocs. Les mêmes évolutions démographiques (distribution des travailleurs selon l'âge et les revenus et des taux de survie par âge) sont appliquées aux deux régimes. Les impacts des différents chocs (productivité, migration et longévité) sur les deux systèmes sont comparés. Et, les différentes réformes (augmentation du taux de cotisation, diminution des prestations de retraite, changement du mode d’actualisation des salaires passés et augmentation de l'âge de la retraite) pour faire face au choc du vieillissement sont analysées et comparées.

Suggested Citation

  • Falilou Fall, 2014. "Comparing the Robustness of PAYG Pension Schemes," OECD Economics Department Working Papers 1134, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:1134-en
    DOI: 10.1787/5jz158w3ghmx-en
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    Cited by:

    1. Falilou Fall, 2015. "The Robustness of Pension Systems: Lessons from the Crisis," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(2), pages 42-49, 08.
    2. Castro, Gabriela & Maria, José R. & Félix, Ricardo Mourinho & Braz, Cláudia Rodrigues, 2017. "Aging And Fiscal Sustainability In A Small Euro Area Economy," Macroeconomic Dynamics, Cambridge University Press, vol. 21(7), pages 1673-1705, October.
    3. Robert J Ellis & Zhiyan Duan & Ye Wang, 2014. "Quantifying Auditory Temporal Stability in a Large Database of Recorded Music," PLOS ONE, Public Library of Science, vol. 9(12), pages 1-24, December.
    4. repec:ces:ifodic:v:13:y:2015:i:2:p:19170021 is not listed on IDEAS
    5. Falilou Fall, 2015. "The Robustness of Pension Systems: Lessons from the Crisis," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(02), pages 42-49, August.

    More about this item

    Keywords

    ageing; contributions définies; defined benefit; defined contribution; durabilité; modélisation de la retraite; pension; pension modelling; pension system; prestation définie; retraite; sustainability; vieillissement;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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