Article (Scientific journals)
Conceptualizing, Measuring and Financing the Legacy Costs in an NDC Reform
Jousten, Alain; Holzmann, Robert
2012In Journal of Pension Economics and Finance, 11 (4), p. 606 - 630
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Keywords :
pensions; pay-as-you-go; notional defined contribution
Abstract :
[en] The paper provides a framework for the conceptualization, definition and measurement of the legacy costs that needs to be addressed in a reform that transforms an unfunded (or non‐financial) defined benefit (NDB) scheme into an equally unfunded notional (or non‐financial) defined contribution (NDC) scheme. During a transition from NDB to NDC a financing gap typically arises due to accrued to date liabilities from the old system in excess of the NDC scheme’s sustainable flow of benefits. This gap ‐ or legacy cost ‐ needs to be estimated and financed. We illustrate different techniques to gauge the scope of the cost. The paper applies the proposed approach to a hypothetical NDC reform in China.
Disciplines :
Economic systems & public economics
Author, co-author :
Jousten, Alain ;  Université de Liège - ULiège > HEC-Ecole de gestion : UER > Théorie monétaire et macroéconomie
Holzmann, Robert
Language :
English
Title :
Conceptualizing, Measuring and Financing the Legacy Costs in an NDC Reform
Publication date :
October 2012
Journal title :
Journal of Pension Economics and Finance
ISSN :
1474-7472
eISSN :
1475-3022
Publisher :
Cambridge
Volume :
11
Issue :
4
Pages :
606 - 630
Peer reviewed :
Peer Reviewed verified by ORBi
Available on ORBi :
since 18 April 2012

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