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System Dynamics Approach As A Risk Management Tool In Analyzing Pension Expenditure: The Case Of Malaysian Employees Public Pension Plan

Author

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  • HASIMAH SAPIRI

    (School of Quantitative Sciences, UUM College of Arts and Sciences, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia)

  • ANTON ABDULBASAH KAMIL

    (Department of Mathematics, School of Distance Education, Universiti Sains Malaysia, 11800 Pulau Pinang, Malaysia)

  • RAZMAN MAT TAHAR

    (Department of Technology Management, Faculty of Manufacturing Engineering and Technology Department, Universiti Malaysia Pahang, 26300 Kuantan, Pahang, Malaysia)

Abstract

Malaysian employees' public pension plan was studied to analyze pension expenditure due to salary risk and demographic risk. By integrating risk management and System Dynamics (SD) approach, the risk factors involved were identified, a causal loop diagram was constructed, and the SD model was developed. By using a sample of actual data, the proposed model was then validated through behavior validity test and a risk analysis was conducted. Then, risk monitoring was performed through policy evaluation in which the impact of different policy scenarios on pension expenditure was analyzed. Risk management and dynamics simulation approach in analyzing pension expenditure were shown to be useful in evaluating the impact of changes and policy decisions on risk.

Suggested Citation

  • Hasimah Sapiri & Anton Abdulbasah Kamil & Razman Mat Tahar, 2014. "System Dynamics Approach As A Risk Management Tool In Analyzing Pension Expenditure: The Case Of Malaysian Employees Public Pension Plan," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 59(05), pages 1-24.
    • Handle: RePEc:wsi:serxxx:v:59:y:2014:i:05:n:s0217590814500465
    DOI: 10.1142/S0217590814500465
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    References listed on IDEAS

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    1. Deborah Roseveare & Willi Leibfritz & Douglas Fore & Eckhard Wurzel, 1996. "Ageing Populations, Pension Systems and Government Budgets: Simulations for 20 OECD Countries," OECD Economics Department Working Papers 168, OECD Publishing.
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    Cited by:

    1. A. Sardi & E. Sorano, 2021. "Dynamic Performance Management: An Approach for Managing the Common Goods," Papers 2102.04090, arXiv.org.
    2. Alberto Sardi & Enrico Sorano, 2019. "Dynamic Performance Management: An Approach for Managing the Common Goods," Sustainability, MDPI, vol. 11(22), pages 1-22, November.

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