Generational Accounting, Solidarity and Pension Losses

C. N. Teulings () and Casper de Vries

No 961, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The creeping stock market collapse eroded the wealth of funded pension systems. This led to political tensions between generations due to the fuzzy definition of property rights on the pension funds wealth. We argue that this problem can best be resolved by the introduction of generational accounts. Using modern portfolio and consumption planning theory we show that the younger generations should have the higher equity exposure due to their human capital. Capital losses should be distributed smoothly over lifetime consumption. When stock markets are depressed equity should be bought, savings and consumption should be scaled down equiproportionally, and retirement should be postponed. Portfolio investment restrictions are quite costly.

Keywords: financial institutions; social security and public pensions; pension funds; private pensions; saving and investment (search for similar items in EconPapers)
JEL-codes: E2 G2 G23 H55 J32 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2003-12
New Economics Papers: this item is included in nep-mac and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published in: De Economist, 2006, 154 (1), 63-83

Downloads: (external link)
https://docs.iza.org/dp961.pdf (application/pdf)

Related works:
Journal Article: Generational Accounting, Solidarity and Pension Losses (2006)
Working Paper: Generational Accounting, Solidarity and Pension Losses (2004)
Working Paper: Generational Accounting, Solidarity and Pension Losses (2003)
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:iza:izadps:dp961

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().