Guarantee Valuation in Notional Defined Contribution Pension Systems

2015 ◽  
Author(s):  
Jennifer Alonso-Garcia ◽  
Pierre Devolder
Keyword(s):  
Defined Contribution ◽  
Pension Systems ◽  
Notional Defined Contribution

Wie hat sich die intragenerationale Umverteilung in der staatlichen Säule des Rentensystems verändert? / Has Intragenerational Redistribution Become Less Important in Pension Systems’ Public Pillar?

2011 ◽  
Vol 231 (2) ◽  
Author(s):  
Tim Krieger ◽  
Stefan Traub
Keyword(s):  
Pension System ◽  
Defined Contribution ◽  
The Public ◽  
Pension Systems ◽  
Catching Up ◽  
Sigma Convergence ◽  
Notional Defined Contribution ◽  
International Convergence ◽  
High Degree ◽  
Beta Convergence

SummaryWe empirically investigate whether the significance of intragenerational redistribution in the public pillar of pension systems in 20 OECD countries has changed systematically since the 1980s and whether international convergence of the degree of intragenerational redistribution can be observed. Intragenerational redistribution is measured by the Bismarckian factor which provides information about the relative importance of the earnings-benefit link in the pension formula (as compared to a flat-benefit Beveridgean pension system). Based on micro data from the Luxembourg Income Study, we find both, a trend towards (more Bismarckian) pension systems which obey the principle of participation equivalence and an international convergence of pension systems. The reduced variation of pension systems (sigma convergence) is driven by countries with a high degree of intragenerational redistribution catching up with more traditional Bismarckian countries (beta convergence). Both, fundamental pension reforms as Sweden’s and Italy’s move to „notional defined contribution‘‘ systems, and parametric reforms ranging from the removal of group-specific benefits to alternative calculations of contribution history, such as changing from „best years‘‘ to the entire worklife, underlie this development.

Increasing life expectancy and NDC pension systems

2016 ◽  
Vol 17 (2) ◽  
pp. 170-199 ◽  
Author(s):  
MARKUS KNELL
Keyword(s):  
Interest Rate ◽  
Life Expectancy ◽  
Labor Force ◽  
Conversion Factor ◽  
Retirement Age ◽  
Defined Contribution ◽  
Rates Of Return ◽  
Pension Systems ◽  
Factor I ◽  
Notional Defined Contribution

AbstractIn this paper, I study how pay-as-you-go pension systems of the notional defined contribution type can be designed such that they remain financially stable in the presence of increasing life expectancy. For this to happen three crucial parameters must be set in an appropriate way: the notional interest rate, the adjustment rate and the annuity conversion factor. I show that there exist two main approaches to implement a stable system. The first uses period-specific annuitization and indexation rates that correct for labor force increases, which are only due to rises in the retirement age which are necessary to ‘neutralize’ the increase in life expectancy. The second approach uses cohort-specific annuitization and indexation rates that are larger than in a stationary situation. This is due to the fact that a continuously increasing life expectancy leads to higher internal rates of return that can be passed on via the indexation.

scholarly journals A Comparison of Lithuanian and Swedish Old Age Pension Systems

Ekonomika ◽  
2019 ◽  
Vol 98 (1) ◽  
pp. 38-59
Author(s):  
Teodoras Medaiskis ◽  
Šarūnas Eirošius
Keyword(s):  
Old Age ◽  
Point Of View ◽  
Defined Contribution ◽  
Pension Policy ◽  
Pension Systems ◽  
The Social ◽  
Swedish Experience ◽  
Notional Defined Contribution ◽  
And Performance ◽  
Definition Of

[full article and abstract in English] The aim of this study is to compare Lithuanian and Swedish pension systems from the point of view of their design and performance in order to elaborate reasonable recommendations to Lithuanian pension policy based on the best Swedish experience. Swedish income, premium and guaranteed old-age pensions system are compared with the analogous Lithuanian system of the “first,” “second” pillars and the “social” pensions. The main features of the systems are discussed, and the performance of the systems, mainly from the point of view of adequacy, is compared. The differences in system design and performance are identified, and the possible reasons of these differences are examined. Special attention is paid to differences in financing and the approach to the definition of benefits. The Lithuanian pension points approach is compared to the Swedish Notional Defined Contribution (NDC) approach. Each system is analyzed, and the relevance of transforming the Lithuanian first pillar pensions into a NDC system is examined.

scholarly journals Notional Defined Contribution (NDC) Schemes: a pension system alternative

2021 ◽  
Vol 16 (2) ◽  
pp. 1-18
Author(s):  
Gustavo da Costa Morais ◽  
Carolina Cardoso Novo ◽  
Mirian Picinini Méxas
Keyword(s):  
Decision Making ◽  
Literature Review ◽  
Pension System ◽  
Social Impacts ◽  
Defined Contribution ◽  
Public Officials ◽  
Pension Systems ◽  
Notional Defined Contribution

This article aims to discuss the main concepts related to notional defined contribution (NDC) schemes and to analyze the experiences of Sweden, Italy, Latvia, Poland and Norway. The methodology is based on a literature review. The main result was that the extent of NDC as a pension system alternative depends on the degree of closeness to the generic scheme. It is recommended to analyze NDC as an alternative for pension system reforms considering its capacity to control structural deficits. As a limitation, it was not analyzed some possible social impacts of NDC introduction. This article is original because encompasses theoretical and practical aspects of NDC schemes. It is expected that this research can contribute to assist public officials in decision-making about reforms in pension systems.

Should a Survivorship Dividend Be Included in Notional Defined Contribution Accounts (NDCs)?

2013 ◽  
Author(s):  
Carlos Vidal-Melii ◽  
Marra del Carmen Boado-Penas ◽  
Francisco Navarro-Cabo
Keyword(s):  
Defined Contribution ◽  
Notional Defined Contribution
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