Abstract
With population ageing, life expectancy at retirement increases and the ratio of contributors to retirees decreases. To ensure solvency, defined benefit (DB) systems undergo continuous parametric reforms, including raising retirement age, whereas personal accounts, defined contribution (PA-DC) systems are endowed with automatic adjustments ensuring solvency in both their funded and pay-as-you-go (PAYG) versions, albeit at the cost of jeopardizing pension adequacy. Within financial defined contribution (FDC) and non-financial defined contribution (NDC) systems, retiring workers are given the free choice of either accepting lower benefits or maintaining benefit adequacy by postponing retirement. Moreover, following the logic of personal accounts workers can see contributions as mandatory savings rather than taxes on their labour services. The extent to which a costly transition from PAYG to fully funded systems can counteract the effects of population ageing is debatable.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsReferences
Auerbach, A. J., Gokhale, J., & Kotlikoff, L. J. (1991). Generational Accounts: A Meaningful Alternative to Deficit Accounting. In D. Bradford (Ed.), Tax Policy and the Economy (pp. 55–110). Cambridge: MIT Press.
Auerbach, A. J., Gokhale, J., & Kotlikoff, L. J. (1994). Generational Accounting: A Meaningful Way to Evaluate Fiscal Policy. The Journal of Economic Perspectives, 8(1), 73–94.
Blake, D. (2006). Pension Economics. Chichester: Wiley.
Börsch-Supan, A., & Wilke, C. B. (2004). The German Social Security System: How It Was and How It Will Be. Cambridge, MA: s.n.
Börsch-Supan, A., & Wilke, C. B. (2006). The German Public Pension System: How It Will Become an NDC System Look-Alike. In R. Holzmann & E. Palmer (Eds.), Pension Reform: Issues and Prospects for Non-Financial Defined Contribution (NDC) Schemes (pp. 573–610). Washington, DC: World Bank.
Brooks, S. M., & Weaver, K. R. (2006). Lashed to the Mast? The Politics of NDC Pension Reform. In R. Holzmann & E. Palmer (Eds.), Pension Reform Issues and Prospects for Non-Financial Defined Contribution (NDC) Schemes (pp. 345–393). Washington, DC: World Bank.
Buchanan, J. (1968). Social Insurance in a Growing Economy: A Proposal for Radical Reform. National Tax Journal, 21, 368–395.
Cesaratto, S. (2005). Pension Reform and Economic Theory. Cheltenham: Edward Elgar.
Cesaratto, S. (2006). Transition to Fully Funded Pension Schemes: A Non-Orthodox Criticism. Cambridge Journal of Economics, 30(1), 33–48.
Department of Economic and Social Affairs of the United Nations Secretariat, Population Division. (2017). Changing Population Age Structures and Sustainable Development: A Concise Report. New York: United Nations.
Diamond, P. A. (1996). Proposals to Restructure Social Security. Journal of Economic Perspectives, 10(3), 67–88.
Disney, R. (2004). Are Contributions to Public Pension Programmes a Tax? Economic Policy, 19(39), 267–311.
Feldstein, M. (1998). Introduction. In M. Feldstein (Ed.), Privatizing Social Security (pp. 1–29). Chicago and London: University of Chicago Press.
Gruber, J., & Wise, D. A. (1999). Social Security and Retirement Around the World. Chicago: University of Chicago Press.
Gruber, J., & Wise, D. A. (2004). Social Security Programs and Retirement Around the World: Micro-Estimation. Chicago: University of Chicago Press.
Gurtovaya, V., & Nisticò, S. (2018). The Notional Defined Contribution Pension Scheme and the German ‘Point System’: A Comparison. German Economic Review, 19(4), 365–382.
Gurtovaya, V., & Nisticò, S. (2019). Does the NDC Scheme Mimic the French Point System? Applied Economics, 51(1), 117–130.
Haveman, R. (1994). Should Generational Accounts Replace Public Budgets and Deficits? Journal of Economic Perspectives, 8(1), 95–111.
Lindbeck, A. (2006). Conceptualization of Non-Financial Defined Contribution Systems. In R. Holzmann & E. Palmer (Eds.), Pension Reform Issues and Prospects for Non-Financial Defined Contribution (NDC) Schemes (pp. 71–75). Washington, DC: World Bank.
Lindbeck, A., & Persson, M. (2003). The Gains from Pension Reform. Journal of Economic Literature, XLI(1), 74–112.
Musgrave, R. A. (1981). A Reappraisal of Financing Social Security. In F. Skidmore (Ed.), Social Security Financing (pp. 89–127). Cambridge: MIT Press.
OECD. (2019). OECD Employment Outlook 2019: The Future of Work. Paris: OECD Publishing.
Oeppen, J., & Vaupel, J. W. (2002). Broken Limits to Life Expectancy. Science, 296(5570), 1029–1031.
Olshansky, S. J. (2018). The Future of Health. Journal of the American Geriatric Society, 66(1), 195–197.
Orszag, P. R., & Stiglitz, J. E. (2001). Rethinking Pension Reform: Ten Myths About Social Security. In R. Holzmann & J. E. Stiglitz (Eds.), New Ideas About Old Age Security. Washington, DC: World Bank.
Palmer, E. (2006). What is NDC? In R. Holzmann & E. Palmer (Eds.), Pension Reform: Issues and Prospects for Non-Financial Defined Contribution (NDC) Schemes (pp. 17–33). Washington, DC: World Bank.
Queisser, M. (1996). Pensions in Germany. Washington, DC: World Bank.
United Nations, Department of Economic and Social Affairs, Population Division. (2017). World Population Prospects: The 2017 Revision. New York: United Nations.
World Bank. (2019). World Bank Open Data. Washington, DC: World Bank Group.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Copyright information
© 2019 The Author(s)
About this chapter
Cite this chapter
Nisticò, S. (2019). The Challenges for Public Pension Schemes. In: Essentials of Pension Economics. Palgrave Pivot, Cham. https://doi.org/10.1007/978-3-030-26496-3_6
Download citation
DOI: https://doi.org/10.1007/978-3-030-26496-3_6
Published:
Publisher Name: Palgrave Pivot, Cham
Print ISBN: 978-3-030-26495-6
Online ISBN: 978-3-030-26496-3
eBook Packages: Economics and FinanceEconomics and Finance (R0)