Sustainability of a pay-as-you-go pension system by dynamic immigration control

Angrisani, Massimo; Attias, Anna; Bianchi, Sergio; Varga, Zoltán

doi:10.1016/j.amc.2012.08.080

Cited by 9 publications

(8 citation statements)

References 13 publications

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“…This means that, in keeping with [4], we assume that the pension timal immigration strategy, which steers the population towards a demographic equilibrium, see [3], [14] . In any case, in order to our model, we assume that the wage dynamics of the stable part of the pension system are not modied by the demographic wave.…”

Section: Generalities To Control the Demographic Wavementioning

confidence: 99%

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Controlling a demographic wave in defined contribution pension systems

Angrisani

Palo

2018

Pure Mathematics and Applications

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In several developed countries, the baby boomers will come to retire in the next decades. This problem will threaten the sustainability and the inter- generational equity of mandatory pay-as-you-go pension systems because they will have to drain the “demographic wave” of retirees with a relatively small number of contributors. In this paper, we give the operating method developed on the basis of a general principle, which a defined contribution pension system, in a state of stable sustainability, should adopt to control these issues in the presence of a demographic wave. In the theoretical profile, our approach breaks and overcomes the classical juxtaposition between funded and pay-as-you-go pension schemes, carrying out the integration of the two financial methods

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Section: Generalities To Control the Demographic Wavementioning

confidence: 99%

“…pressed by(3), is the probabilistic component of the pension liability because its evaluation is based on life tables. From(2) and(3), the dierential equation of evolution of the total pension system is deriveḋ L(t) = L(t)r L (t) + α(t)W (t) − P (t).…”

mentioning

confidence: 99%

Controlling a demographic wave in defined contribution pension systems

Angrisani

Palo

2018

Pure Mathematics and Applications

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“…However, the government's financial investment is a limited liability to ensure the functioning of social insurance rather than the acceptance of full responsibility for the entire scheme. Otherwise, the government would face extreme political and financial pressure that would ultimately result in an unsustainable social insurance scheme (Casamatta et al 2000;Angrisani et al 2012).…”

Section: Theoretical Analysis: the Revenue-expenditure Balance Is Thementioning

confidence: 99%

“…Some analysts believe that social insurance can avoid the adverse selection, moral hazard, exclusion of low-income groups, and reduction of free-rider effects of commercial insurance (Angrisani et al 2012). Social insurance is most beneficial to the unemployed, low-income population and to the elderly who have no children to support them.…”

Section: Theoretical Analysis: the Revenue-expenditure Balance Is Thementioning

confidence: 99%

The Misunderstanding of Social Insurance: The Inadequacy of the Basic Pension Insurance for Urban Employees (BPIUE) for the Aging Population of China

Hu¹

2018

Social Sciences

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The Chinese public has shown increasing concern about the "inadequacy" of the funds available for the Basic Pension Insurance for Urban Employees (BPIUE). The government has managed the issue by balancing the program's revenue and expenditures each year and by increasing subsidies for it from all levels. These actions have raised a number of questions, such as why the program still needs financial subsidies as the fund's balance continues to increase. The BPIUE was initiated in 1991, and the combination model of "social pooling" and "individual accounts of employees" was established in 1995 and formally launched in 1998. Also, in 1998, reforms including the downsizing of state-owned enterprises were implemented, and tens of millions of employees of state-owned enterprises entered early retirement. Local governments used funds from the individual accounts to pay pensions to employees based on length of service, and as a result, the individual accounts have remained empty ever since. Based on the definition of social insurance and an empirical analysis of the BPIUE fund, this paper conducts a qualitative and quantitative analysis of the plan from two perspectives, striving to provide an objective explanation and assessment of the pension fund's inadequacy. On this basis, the paper analyzes the impact of the aging population of China on the existing and future BPIUE fund gap.

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“…In most of the developed countries, pay-as-you-go (PAYG) pension systems, where pensions are paid from the actual contribution of the active population, face up with serious problems of sustainability due to financial, economic, and demographic uncertainties, see e.g. [1], [2], [3], [4], and [5]. Many countries tried to solve this problem introducing the Defined Contribution (DC) formula, according to which contributions are fixed and benefits depend on the value of assets and returns accumulated.…”

Section: Introductionmentioning

confidence: 99%

The optimal rate of return for defined contribution pension systems in a stochastic framework

Angrisani

Nella

Palo

et al. 2018

Pure Mathematics and Applications

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This paper deals with the problem of the optimal rate of return to be paid by a defined contribution pension system to its participants’ savings, namely the rate that achieves the goal of the most favorable returns on their contributions jointly with the sustainability of the pension system. We consider defined contribution pension systems provided with a funded component, and for their study we use the “theory of the logical sustainability of pension systems” already developed in several previous works. In this paper, we focus on pension systems in a demographically stable state, whereas the productivity of the active participants and the financial rate of return on the pension system’s fund, rates that constitute the “ingredients” of the optimal rate of return on contributions, are modeled by two stochastic processes. We show that the decisional rule defining the optimal rate of return on contributions is optimal in the sense that it is effective in terms of sustainability, and also efficient in the sense that if the system pays to its participants’ contributions a rate of return that is either higher or lower than the one provided by the rule, then the pension system becomes unsustainable or overcapitalized, respectively.

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Sustainability of a pay-as-you-go pension system by dynamic immigration control

Cited by 9 publications

References 13 publications

Controlling a demographic wave in defined contribution pension systems

Controlling a demographic wave in defined contribution pension systems

The Misunderstanding of Social Insurance: The Inadequacy of the Basic Pension Insurance for Urban Employees (BPIUE) for the Aging Population of China

The optimal rate of return for defined contribution pension systems in a stochastic framework

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