THE SPANISH PENSION SYSTEM: ISSUES OF INTRODUCING NOTIONAL DEFINED CONTRIBUTION ACCOUNTS

Carlos Vidal-Melia and Inmaculada Domínguez-Fabian
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Inmaculada Domínguez-Fabian: University of Extremadura Spain

Public Economics from University Library of Munich, Germany

Abstract: There are two aims to this paper: firstly, to provide an objective technical assessment of the current situation of the contributory pension system in Spain and its prospects for the future, and secondly, to look at the issues surrounding the introduction of a system of notional defined contribution accounts. To this end we explain the basic elements upon which the current system is based and show its main indicators, then set out some of its fundamental problems. Following this we look at the most relevant research work, where forecasts can be found that will give us a clear idea of the system's financial sustainability. Finally we put forward an argument as to why a notional accounts system could be a valid alternative for reforming the current system, and suggest which formula or group of formulas would best fit the profile of contributor-beneficiary risk and what the transition process would be

Keywords: Retirement; Pay-as-you-go; Internal Rate of Return (IRR); Financial sustainability. (search for similar items in EconPapers)
JEL-codes: H55 J26 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2005-04-18
New Economics Papers: this item is included in nep-eec
Note: Type of Document - pdf; pages: 27. Forthcoming in R. Holzmann & E. Palmer (Eds) “Financial Defined Contribution (NDC) Pension Schemes: Concept, Issues, Implementation, Prospects”. The World Bank and Riksforsakrings Verket. (2005)
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