Adequacy, fairness and sustainability of pay-as-you-go-pension-systems: defined benefit versus defined contribution

Jennifer Alonso-Garcia*, Maria del Carmen Boado-Penas, Pierre Devolder

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

15 Citations (Scopus)
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Abstract

There are three main challenges facing pay-as-you-go public pension systems. First, pension systems need to provide an adequate income for pensioners in the retirement phase. Second, participants wish a fair level of benefits in relation to the contributions paid. Last but not least, the pension system needs to be financially sustainable in the long run. In this paper, we jointly analyse the adequacy, fairness and sustainability of both defined benefit and defined contribution schemes. Finally, risk sharing mechanisms, that involve changes in the key variables of the system, are designed to restore the financial sustainability while we study their consequences on the adequacy and fairness of the system.

Original languageEnglish
Pages (from-to)1100-1122
Number of pages23
JournalEuropean Journal of Finance
Volume24
Issue number13
DOIs
Publication statusPublished - 2018
Externally publishedYes

Keywords

  • adequacy
  • fairness
  • pay-as-you-go
  • public pensions
  • risks
  • sustainability
  • WAGE CURVE
  • OPTIMAL MIX
  • CONSUMPTION
  • SCHEMES
  • EQUITY
  • MODEL

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