Pension Reforms: Key Issues Illustrated With an Actuarial Model

Description

This paper addresses the design of pension reforms under ageing populations caused by low fertility and increasing longevity. Reforms are assessed, in particular, with regard to financial sustainability and intergenerational fairness. As a benchmark for the latter it is required that all generations with the same fertility and longevity should pay the same proportion of wage to pensions to earn the same replacement rate and retirement age. Correspondingly, if the demographic factors differ from one generation to another so also should the pension benefits and/or the replacement rate.