About this Engineering article

Automatic balance mechanisms for notional defined contribution pension systems guaranteeing social adequacy and financial sustainability: an application to the Italian pension system by Devolder, Pierre; Levantesi, Susanna; Menzietti, Massimiliano is a Engineering article available to read on EtoBox.

## Abstract Since the mid 1990s some European countries (including Italy) implemented a Notional Defined Contribution (NDC) pension system. Such a system is based on pay-as-you-go funding, while the pension amount is a function of the individual lifelong contribution. Despite many appealing features, the NDC system presents some drawbacks: first, it is vulnerable to demographic and economic shocks compromising the financial sustainability; second, it could fail to guarantee adequate pension benefits to pensioners. In order to reduce the first limit, automatic balance mechanisms (ABMs) have been proposed in literature and also implemented in Sweden, while solutions that combine financial sustainability and social adequacy have been applied only in a pay-as-you-go point system. The aim of this paper is to insert into the Italian NDC architecture ABMs that preserve social adequacy under financial sustainability constraints. Godinez-Olivares et al. (Insur Math Econ 69:117–126, 2016) built ABMs for a Defined Benefit pension system using nonlinear optimization techniques to calculate the optimal paths of the control variables representing the main drivers of the system: contribution rate

Author

Devolder, Pierre; Levantesi, Susanna; Menzietti, Massimiliano

Publisher

Springer US; Springer-Verlag; Kluwer Academic Publishers; Springer Science and Business Media LLC; Society for Mining, Metallurgy and Exploration Inc. (ISSN 0254-5330)

Published

2020

Language

EN

Field

Engineering (Social Sciences)