Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/86873 
Year of Publication: 
2011
Series/Report no.: 
Tinbergen Institute Discussion Paper No. 11-056/2/DSF19
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
We explore the feasibility of a funded pension system with intergenerational risk sharing when participation in the system is voluntary. Typically, the willingness of the young to participate depends on their belief about the future young's willingness to do so. We characterise equilibria with voluntary participation and show that the likelihood of their existence increases with risk aversion and financial market uncertainty. We find that it is likely that mandatory participation is necessary to sustain a funded pension pillar and to let participants benefit from intergenerational risk sharing.
Subjects: 
participation constraints
funded pensions
intergenerational risk sharing
JEL: 
C61
H55
J32
Document Type: 
Working Paper

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