Regressive intracohort redistribution in nonfinancial defined contribution pension

Andras Simonovits ()
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Andras Simonovits: Institute of Economics Centre for Economic and Regional Studies Hungarian Academy of Sciences

No 1312, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: Nonfinancial defined contribution (NDC) pension systems have recently become popular because they provide the strong incentives of the private funded systems without requiring a difficult transition period. Using the framework of mechanism design, these systems have theoretically been criticized because they neglect the regressive intracohort redistribution: longer lived workers retire later and are rewarded as if their life expectancies were average. Now we document this by Hungarian data, and giving up the framework of mechanism design, we corroborate our earlier qualitative findings withthe more realistic benefit adjustment function and wage heterogeneity.

Keywords: nonfinancial defined contributions; variable retirement; adverse selection; actuarial fairness (search for similar items in EconPapers)
JEL-codes: C61 C63 D82 D91 H55 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2013-04
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Citations: View citations in EconPapers (1)

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