Automatic Balance Mechanisms in an NDC Pension System with Disability Benefits

Lorenzo Fratoni (), Susanna Levantesi () and Massimiliano Menzietti ()
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Lorenzo Fratoni: Sapienza University of Rome
Susanna Levantesi: Sapienza University of Rome
Massimiliano Menzietti: University of Calabria

A chapter in Mathematical and Statistical Methods for Actuarial Sciences and Finance, 2022, pp 266-271 from Springer

Abstract: Abstract The aging population is currently impacting several countries worldwide, generating socio-economic needs such as long-term care (LTC) in old age. Developing a strategy linking these care needs to the pension scheme can help in managing the increasing cost of care of pensioners affected by disability. This paper presents a model in which the LTC benefit is integrated into a notional-defined contribution (NDC) pension system. The model’s financial sustainability is investigated without and with the application of an automatic balance mechanism (ABM) founded on a Liquidity Ratio. Economic and demographic variables (including the new disability risk element generated by the LTC) are modeled in a stochastic environment.

Keywords: LTC benefits; NDC pension system; Financial sustainability; Automatic balance mechanisms (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-99638-3_43

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DOI: 10.1007/978-3-030-99638-3_43

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