Ageing Populations and Intergenerational Risk-sharing in PAYG Pension Schemes

Agneta Kruse ()
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Agneta Kruse: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden, http://www.nek.lu.se/en/contact

No 2002:18, Working Papers from Lund University, Department of Economics

Abstract: The purpose of this paper is to compare pension schemes with respect to their intergenerational redistributive effects caused by economic and demographic changes. It is shown how these effects depend on the specific design of the pension scheme, with special attention devoted to the indexation problem. There is a potential trade-off between financial stability of the pension system and a “desired” distribution between generations. A buffer fund is often seen as the remedy to demographic strain and potential conflict. Therefore, the possibility of accumulating (and de-cumulating) a buffer fund is included. A lifecycle perspective is applied and the risk-sharing is measured by different generations’ rate of return. The analysis is carried out within the framework of an over-lapping generation model in the setting of a stylised economy.

Keywords: Notional defined contribution pension systems; demographic changes; indexing; intergenerational risk-sharing (search for similar items in EconPapers)
JEL-codes: D30 H55 J14 J26 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2002-07-02
New Economics Papers: this item is included in nep-pbe
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Citations: View citations in EconPapers (3)

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