Arbeitspapier
Intergenerational Risk-Sharing through Funded Pensions and Public Debt
We explore the benefits of intergenerational risk-sharing through both private funded pensions and via the public debt. We use a multi-period overlapping generations model with a PAYG pension pillar, a funded pension pillar and a government. Shocks are smoothed via the public debt and variations in the indexation of pension entitlements and the pension contribution rate, which both respond to funding ratio of the pension fund. The intensity of these adjustments increases when the funding ratio or the public debt ratio get closer to their boundaries. The best-performing pension arrangement is a hybrid funded scheme in which both contributions and entitlement indexation are deployed as stabilisation instruments. We find trade-offs between the optimal use of these instruments. We also find that entitlement indexation and the response of the tax rate to public debt movements are complements. We compare different taxation regimes and conclude that a regime in which pension benefits are taxed, while contributions are paid before taxes, is preferred to a regime in which contributions are paid after taxes, while benefits are untaxed.
- Language
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Englisch
- Bibliographic citation
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Series: CESifo Working Paper ; No. 4624
- Classification
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Wirtschaft
Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors
Social Security and Public Pensions
National Debt; Debt Management; Sovereign Debt
- Subject
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intergenerational risk-sharing
pension funds
public debt
EET and TEE tax regimes
welfare
- Event
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Geistige Schöpfung
- (who)
-
Chen, Damiaan H.J.
Beetsma, Roel
Ponds, Eduard
Romp, Ward E.
- Event
-
Veröffentlichung
- (who)
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Center for Economic Studies and ifo Institute (CESifo)
- (where)
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Munich
- (when)
-
2014
- Handle
- Last update
-
10.03.2025, 11:45 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Chen, Damiaan H.J.
- Beetsma, Roel
- Ponds, Eduard
- Romp, Ward E.
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2014
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