Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/264771 
Authors: 
Year of Publication: 
2012
Series/Report no.: 
Working Paper No. 179
Publisher: 
Oesterreichische Nationalbank (OeNB), Vienna
Abstract: 
In this paper I study how PAYG pension systems of the notional defined contribution type can be designed such that they remain financially stable in the presence of increasing life expectancy. For this to happen two crucial parameters must be set in an appropriate way. First, the remaining life expectancy has to be based on a crosssection measure and, second, the notional interest rate has to include a correction for labor force increases that are only due to rises in the retirement age which are necessary to "neutralize" the increase in life expectancy. It is shown that the selfstabilization is effective for various patterns of retirement behavior and also – under certain assumptions – if life expectancy reaches an upper limit.
Subjects: 
Pension System
Demographic Change
Financial Stability
JEL: 
H55
J1
J18
J26
Document Type: 
Working Paper

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