Pension Funds and Risk-sharing in the Finnish Earnings-related Pension System
Jukka Lassila and
No 90, ETLA Reports from The Research Institute of the Finnish Economy
Abstract We study the use of pension funds in the Finnish earnings-related pension system with the aim of smoothing contributions over time under demographic and economic risks. Smoothing is affected by the revisions in long-term forecasts and is thus imperfect. As a partially funded defined-benefit system, demographic risks and asset yield risks directly affect the contributions. In a general equilibrium setup, these risks also affect wages and thus pension benefits and replacement rates. We also consider alternative benefit rules where risks are transferred more to the pensioners.
Keywords: Pensions; Funding; Contribution smoothing; Risks; Generational fairness (search for similar items in EconPapers)
JEL-codes: E17 H55 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-bec, nep-eur, nep-mac and nep-ore
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