Optimal strategies for pay-as-you-go pension finance: A sustainability framework

Godínez-Olivares, Humberto; Boado‐Penas, María del Carmen; Haberman, Steven

doi:10.1016/j.insmatheco.2016.05.001

Cited by 38 publications

(36 citation statements)

References 16 publications

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“…The financial sustainability of the pension plan is a core theme of social welfare, especially in the era of population aging. Due to its close relations with macroeconomic development indicators, such as the gross domestic product, government revenue, local labor supply, and employment, as well as individual decisions on bearing children, consumption, saving, and retirement at the micro level [4,[15][16][17][18], policy reforms have been taken to enhance the sustainable capacity of the pension plan.…”

Section: Literature Reviewmentioning

confidence: 99%

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Assessment of the Financial Sustainability of China’s New Rural Pension Plan: Does the Demographic Policy Reform Matter?

2019

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Rural China is experiencing a rapid aging process caused by low fertility and large-scale rural-to-urban migration, which will place an increasing payment burden on the rural pension plan. To allay the negative impact of the aging transition, China has recently carried out a demographic policy reform, replacing the famous one-child policy with the two-child policy. This paper evaluates the impacts of the demographic policy reform on the financial sustainability of China’s New Rural Pension Plan (NRPP). By applying the cohort component population projection method and building actuarial models, the solvency sustainability of the NRPP between 2019 and 2080 is estimated under six demographic policy scenarios, followed by sensitivity analysis. The simulation results show that under the one-child policy, the current and the accumulated pension fund would run deficits in 2030 and 2042, and then the pension deficits would expand rapidly. The two-child policy would relieve the pension pressure moderately before 2075, but thereafter, the pension deficits would become much worse. Sensitivity analysis of a series of demographics and pension parameters on the financial sustainability of the NRPP are displayed. On average, the long-term pension gap may not be avoided for the NRPP, regardless of raising the contribution rate, delaying the retirement age, or encouraging people to have more children.

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Section: Literature Reviewmentioning

confidence: 99%

“…Encouraging people to have more children is one common policy adopted by many countries to meet the challenges of the aging transition [16]. Existing studies have examined the impact of fertility dynamics and family policy reforms on PAYG pension sustainability.…”

Section: Literature Reviewmentioning

confidence: 99%

Assessment of the Financial Sustainability of China’s New Rural Pension Plan: Does the Demographic Policy Reform Matter?

2019

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“…In calculation of accumulated fund in an individual's account, we modify equation on dynamics of fund from [10] into Equation (1) using the similar concept.…”

Section: Mathematical Modellingmentioning

confidence: 99%

“…In searching for suitable method of accomplishing this study, several papers are studied. We begin with Haberman [9][10][11][12]18,19]. We also study paper from MacDonald and Cairns (2011) on retirement decision model for DC retirement system [16].…”

Section: Introductionmentioning

confidence: 99%

Optimal Path for Sustainable Retirement System in Malaysia

Run¹,

Kılıçman²

2018

Preprint

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This research aims to analyse the sustainability of retirement system and relevant optimal path to achieve sustainable post-retirement livings in Malaysia context. Focus of this study is put on Employees Provident Fund (EPF) which is mainly constituted by employees from private sector. EPF is a fully funded defined-contribution by both employees and employers. In this research, main variables used are contribution rate and retirement age based on relevant indexation of pension. For a sustainable retirement living, retirement benefits are expected to be in a maximisation function. Attempts to find sustainable retirement fund are via step-by-step mathematical calculation using formulas in Microsoft Excel and verification of the result with Excel Solver via Generalised Reduced Gradient (GRG) algorithm. Eventually, two-third retirement decision model is used to justify the sustainability of retirement fund other than justification using monthly household expenditure.

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“…Automatic balancing mechanisms to restore the actuarial balance of a pay-as-you-go system have recently been analysed byGodinez-Olivares et al (2016).…”

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confidence: 99%

Towards an Equitable and Sustainable Points System: A Proposal for Pension Reform in Belgium

et al. 2017

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We describe the points system that has been proposed by the Belgian Commission for Pension Reform 2020-2040. Intragenerational equity can be realised in a flexible and transparent way through the allocation of points within a cohort. The intergenerational distribution is determined by fixing the value of a point for the newly retired and a sustainability parameter for the actual retirees. The value of the point links future pensions to the future average living standard of the population in employment. This implies that credible promises can

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Optimal strategies for pay-as-you-go pension finance: A sustainability framework

Cited by 38 publications

References 16 publications

Assessment of the Financial Sustainability of China’s New Rural Pension Plan: Does the Demographic Policy Reform Matter?

Assessment of the Financial Sustainability of China’s New Rural Pension Plan: Does the Demographic Policy Reform Matter?

Optimal Path for Sustainable Retirement System in Malaysia

Towards an Equitable and Sustainable Points System: A Proposal for Pension Reform in Belgium

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