Dekkers, Gijs J.M. and Nelissen, Jan H.M. and Becker, Henk A. (2002): Intergenerational redistribution of income through capital funding pension schemes: simulating the Dutch pension fund ABP.
Download (116Kb) | Preview
In most countries, the largest proportion of the pension benefits that are paid out to the elderly are brought together by the contributions of the active population. This type of financing is known as a Pay-As-You-Go-scheme. In this scheme, an important ‘chain of solidarity' covers for the pension of the preceding generation. So, there is a pattern of winners and losers that is caused by the rates of ageing of the populations, in combination with PAYG-pension schemes. In pension schemes based on the Capital Funding (CF) type, individuals of every generation build up a certain future pension claim. So, every generation builds up its own future pension benefit in this type of scheme. Hence, CF pension schemes are believed not to rely on income flows between generations, since every generation finances its own future pension. The advantage then is that there are no winners or losers, from the generational point of view at least, so that demographic developments cannot jeopardize the system. But, this only holds for Defined-Contribution (DC) pension systems. In practice, we also observe Defined-Benefit (DB) pension systems. In fact, the larger part of the occupational pensions schemes in the Netherlands are DB ones. For this type of schemes it holds that absence of intergenerational income flows is a too optimistic view, though the redistribution is not that strongly as in the case of PAYG schemes. The central question in this contribution is whether intergenerational redistribution of income occurs via Capital Funding in case of DB pension schemes in the Netherlands. To that end we analyse the Dutch civil servants' pension fund in the Dutch dynamic microsimulation model NEDYMAS.
|Item Type:||MPRA Paper|
|Original Title:||Intergenerational redistribution of income through capital funding pension schemes: simulating the Dutch pension fund ABP|
|Keywords:||microsimulation; ageing; social hypotheses; poverty; inequality|
|Subjects:||D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions
J - Labor and Demographic Economics > J1 - Demographic Economics > J14 - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
I - Health, Education, and Welfare > I3 - Welfare and Poverty > I32 - Measurement and Analysis of Poverty
|Depositing User:||Gijs Dekkers|
|Date Deposited:||15. Feb 2012 15:46|
|Last Modified:||17. Feb 2013 23:20|
Aaron, H., 1977, Demographic Effects on the Equity of Social Security Benefits, in: Feldstein, M., Inman, R. (eds), The Economics of Public Services, MacMillan, New York, pp. 151-173.
Algemeen Burgerlijk Pensioenfonds ABP, 1980-1995, Annual Reports/Jaarverslagen, incl. Statistical Appendices, Algemeen Burgerlijk Pensioenfonds, Heerlen.
Boadway, R., M. Marchand and P. Pestieau, 1991, Pay-As-You-Go Social Security in a Changing Environment, Journal of Population Economics, no 4, pp. 257-280.
Centraal Planbureau (CPB)/ Centraal Bureau voor de Statistiek (CBS), 1997, Bevolking en Arbeidsaanbod: drie scenario’s tot 2020, SDU-publishers, The Hague.
Creedy, J., 1991, Lifetime Earnings and Inequality, Economic Record, vol. 67, no 196, pp. 46-58, 1991.
Creedy, J., 1994, Pensions and Compensating Wage Variations, Scottish Journal of Political Economy, vol. 41, no 4, pp. 454-46.
Creedy, J., 1999, Lifetime versus Annual Income Distribution, in Silber, J. (ed) Handbook on Income Inequality Measurement, Recent Economic Thought, Kluwer Academic Publishers, Boston/Dordrecht/London.
Dekkers, G., J. Nelissen and H. Verbon, 1995, Intergenerational Equity and Pension Reform: the case of the Netherlands, Public Finance/Finances Publiques, vol 50, pp. 224-245.
Dekkers, G.J.M., 2001, Intergenerational Redistribution of Income Through Capital Funding Pension Schemes, Ph.D. thesis Tilburg University, Shaker Publishing, Maastricht.
Ermish, J., 1989, in: Johnson, P., Conrad, C., Thomson, D., (eds) Workers Versus Pensioners: Intergenerational Justice in an Ageing World, Centre for Economic Policy Research, Manchester University Press, Manchester.
Guillemard, A., 1999, Equity and Redistribution between Generations: a Challenge for the Future of Pensions and All Social Protection Systems, International Social Security Review, vol. 52, no 3, pp. 69-92.
Harding, A., 1993, Lifetime Income Distribution and Redistribution: Applications of a Microsimulation Model, Contributions to Economic Analysis 221, North Holland, Amsterdam.
Jansweijer, R., 1996, Gouden Bergen, Diepe Dalen: de inkomensgevolgen van een betaalbare oudedagsvoorziening, Wetenschappelijke Raad voor het Regeringsbeleid, Sdu-Uitgevers, The Hague.
Kleynen, R., 1996, Asset Liability Management binnen Pensioen¬fondsen, Ph.D. thesis, Tilburg University, Tilburg.
Kuné, J., 1992, The Netherlands' government policy in respect of the public employees pension scheme, Verzekeringsarchief, vol. 69, pp. 319-335.
Miles, D., A. Timmermann, 1999, Risk Sharing and Transition Costs in the Reform of Pension Systems in Europe, Economic Policy, no 29, pp. 253-286.
Nelissen, J.H.M., 1994, Income Redistribution and Social Security: an application of of microsimulation, Chapman & Hall, London.
Nelissen, J.H.M., 1998, Annual versus Lifetime income redistribution by Social Security, Journal of Public Economics, vol 68, no 2, 1998, pp. 223-250.
Petersen, C., (ed.), 1990, Pensioenen, Uitkeringen, Financiering & Beleggingen, Stefert Kroese, Leiden.
Ponds, E., 1995, Supplementary Pensions, Intergenerational Risk-Sharing and Welfare, Dissertation Tilburg University, Tilburg.
Raffelhuschen, B., 1999, Generational Accounting in Europe, In: Baldwin, J., Oaxaca, R., The American Economic Review, Papers and Proceedings of the Annual Meeting of the American Economic Association, vol. 89, no 2, pp. 167-170.
Verbon, H., M. Verhoeven, 1992, Decision Making on Pension Schemes Under Rational Expectations, Journal of Economics, vol. 56, no 1, pp. 71-97.
Wetenschappelijke Raad voor het Regeringsbeleid (WRR), 1999, Generatiebewust Beleid, SDU, The Hague.