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Savings and Implicit Debt in Pension Systems

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  • Szüle, Borbála

Abstract

In recent years, there has been an ongoing debate on the restructuring of pay-as-you-go pension systems. The study, which models demographic effects, compares two types of pay-as-you-go pension systems (those with and without notional individual accounts) on the basis of two features (savings and implicit debt in the pension systems). There is a strong link between these features in a theoretical framework. According to one of the results featured in the study, in case of equal revenues and expenditures, a smaller population growth rate and a higher life expectancy together yield a smaller savings ratio in both pension systems, while the effect on implicit debt is unclear. Another result shows that a lower capital market yield may also be accompanied by greater implicit debt and higher savings ratio in both pension systems. The results also highlight the complexity of the effects of demographic changes on pension systems.

Suggested Citation

  • Szüle, Borbála, 2013. "Savings and Implicit Debt in Pension Systems," Public Finance Quarterly, Corvinus University of Budapest, vol. 58(3), pages 334-348.
    • Handle: RePEc:pfq:journl:v:58:y:2013:i:3:p:334-348
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    File URL: https://unipub.lib.uni-corvinus.hu/8950/
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    References listed on IDEAS

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    1. Robert Holzmann, 2013. "Global pension systems and their reform: Worldwide drivers, trends and challenges," International Social Security Review, John Wiley & Sons, vol. 66(2), pages 1-29, April.
    2. Christine Mayrhuber & Gerhard Rünstler & Thomas Url & Werner Eichhorst & Michael J. Kendzia & Maarten Gerard & Connie Nielsen, 2011. "Pension Systems in the EU. Contingent Liabilities and Assets in the Public and Private Sector," WIFO Studies, WIFO, number 43938, January.
    3. Dutta, Jayasri & Kapur, Sandeep & Orszag, J. Michael, 2000. "A portfolio approach to the optimal funding of pensions," Economics Letters, Elsevier, vol. 69(2), pages 201-206, November.
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    More about this item

    Keywords

    pay-as-you-go; pension;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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