Response to Breyer

Valdés‐Prieto, Salvador

doi:10.1111/j.0347-0520.2004.00366.x

Cited by 3 publications

(2 citation statements)

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“…6 Since benefits in a NDC plan grow with earnings, a perfect matching asset for the accumulation phase would be either (zero-coupon) wage-indexed bonds or -since the 4 For example, attempts to provide guaranteed minimum returns within FDC plans tend to reduce total returns. 5 Valdés-Prieto (2000, 2004 provides the formal conditions under which a FDC plan can replicate a mature NDC plan: (a) the FDC plan is taxed to equalise returns, (b) the NDC plan is heavily guaranteed by the State, and (c) the FDC plan is fully invested in long term public debt. The two plans will, however, differ during a transition arising from changes in the population growth rate.…”

Section: Can Ndc Be Replicated In a Fdc Framework?mentioning

confidence: 99%

NDC v. FDC: Pros, Cons and Replication

Blake

2011

SSRN Journal

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Section: Can Ndc Be Replicated In a Fdc Framework?mentioning

confidence: 99%

NDC v. FDC: Pros, Cons and Replication

Blake

2011

SSRN Journal

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“…For example, attempts to provide guaranteed minimum returns within FDC plans tend to reduce total returns. 5Valdés-Prieto (2000, 2004 provides the formal conditions under which a FDC plan can replicate a mature NDC plan: (a) the FDC plan is taxed to equalise returns, (b) the NDC plan is heavily guaranteed by the State, and (c) the FDC plan is fully invested in long term public debt. The two plans will, however, differ during a transition arising from changes in the population growth rate.6 It is possible for these bonds to be issued by private sector organisations , although with greater credit risk attached.…”

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confidence: 99%

NDC v FDC: Pros, Cons and Replication

Blake

2011

SSRN Journal

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Securitization of taxes implicit in PAYG pensions

Valdés‐Prieto¹

2005

Economic Policy

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"To preserve solvency, a pay-as-you-go (PAYG) pension system needs to adjust contribution rates and pension promises over time. Currently, it is not possible to hedge in the financial market against politically determined uncertainty as regards these parameters. I consider a policy reform whereby property rights are established on the implicit lifetime tax levied by PAYG finance, and are assigned to the pension institution. These property rights are well defined if the reform also features rule-based allocation of aggregate risk, in the form of defined-contribution or defined-benefit schemes. I show that a PAYG pension system may indeed be instantly restructured so as to minimize political risk and allow financial-market diversification of risk. A side benefit is securitization of human-capital flows, which are not traded in existing financial markets. The new securities, if traded in appropriately competitive financial markets, are complementary to the Notional Account reforms of the 1990s. However, fiscal instability can increase if securitization is implemented in the absence of initial solvency and credible adoption of rule-based methods to allocate aggregate risk." Copyright � CEPR, CES, MSH, 2005.

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Response to Breyer

Cited by 3 publications

References 0 publications

NDC v. FDC: Pros, Cons and Replication

NDC v. FDC: Pros, Cons and Replication

NDC v FDC: Pros, Cons and Replication

Securitization of taxes implicit in PAYG pensions

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