Controlling the effects of demographic risks: the role of pension indexation schemes

Juha M. Alho, Svend E. Hougaard Jensen, Jukka Lassila and Tarmo Valkonen

Journal of Pension Economics and Finance, 2005, vol. 4, issue 2, 139-153

Abstract: Within a model featuring demographic uncertainty, this paper studies a pension reform where public pension benefits are indexed to the total wage bill rather than to the average wage level. This implies a decline in the variability of contribution rates and an increase in the variability of replacement rates. While thus shifting some of the adjustment burden following demographic shocks to pensioners, the trade-off in risks is found to be fairly moderate.

Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jpenef:v:4:y:2005:i:02:p:139-153_00

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