Understanding the Effect of Market Risks on New Pension System and Government Responsibility

Sourish Das, Bikramaditya Datta and Shiv Ratan Tiwari

Papers from arXiv.org

Abstract: This study examines how market risks impact the sustainability and performance of the New Pension System (NPS). NPS relies on defined contributions from both employees and employers to build a corpus during the employee's service period. Upon retirement, employees use the corpus fund to sustain their livelihood. A critical concern for individuals is whether the corpus will grow sufficiently to be sustainable or if it will deplete, leaving them financially vulnerable at an advanced age. We explore the impact of market risks on the performance of the corpus resulting from the NPS. To address this, we quantify market risks using Monte Carlo simulations with historical data to model their impact on NPS. We quantify the risk of pension corpus being insufficient and the cost to the Government to hedge the risk arising from guaranteeing the pension.

Date: 2024-08, Revised 2025-03
New Economics Papers: this item is included in nep-age
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2408.13200 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2408.13200

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().