Compiling the actuarial balance for pay-as-you-go pension systems. Is it better to use the hidden asset or the contribution asset?

The aim of this article is twofold: to establish the connection between the 'Contribution Asset' (CA) and the 'Hidden Asset' (HA) and to determine whether using either of them to compile the Actuarial Balance (AB) sheet in the Pay-As-You-Go (PAYG) pension system will provide a reliable solvency indicator. With these aims in mind, we develop a model based on those first put forward by Settergren and Mikula (2005) and Boado-Penas et al. (2008) to obtain the analytical properties of the CA and to confirm its soundness as a measure of the assets of a PAYG scheme. Our model also enables us to explore whether, and to what extent, the HA can be considered a second alternative measure of the assets for PAYG schemes. The main theoretical finding is that, despite their very different natures, the HA and the CA may nearly coincide at the limit when the interest rate of the financial market approaches the growth of the covered wage bill from above, but the HA supplies a solvency indicator which is not always consistent with the system's financial health.</p

Retirement transitions under changing institutional conditions : towards increasing inequalities? Comparing evidence from 13 countries

The concluding chapter summarizes the theoretical approach of the book and provides a stylized overview of the results from the international comparison and the 13 single country studies. It highlights that the major pension system and labor market reforms throughout the last 15 years in Europe, Japan, and the USA have been effective in meeting their goal of delaying retirement. However, it seems as if not all older workers are benefiting from this trend. Vulnerable labor market groups such as the low-skilled, unemployed, long-term sick, and migrants are struggling to meet the requirements of the new active aging policy. Policymakers, trade unions, and employers must recognize the inequalities that the credo of extended working life might cause and keep them in mind when planning new reforms of the welfare state or changes to workplace settings

Automatic Balancing Mechanisms for Pay-As-You-Go Pension Finance: Do They Actually Work?

In pay-as-you go pension systems, automatic balancing mechanisms (ABMs) are designed to face adverse demographic and economic changes. In this respect, ABMs can be defined as a set of pre-determined measures established by law to be applied immediately as required according to an indicator that reflects the financial health of the system. The purpose of ABMs is, through successive application, to restore the sustainability of the pay-as-you-go pension system. First, adjustments can be made in benefit levels to reflect changes in life expectancy; second, adjustments can be made through the revaluation of the contribution basis of earlier years; and third, adjustments may occur through the revaluation of pensions in payment. Countries such as Finland, Portugal, Germany, Sweden and Japan, amongst others, have already legislated and included different types of mechanisms into their pension systems. This chapter aims to explore the different mechanisms that have been recently set up and analyse their effectiveness in terms of financial sustainability and adequacy of benefits.</p

Parental leave benefit and differential fertility responses: evidence from a German reform

This paper examines the causal effects of a major change in the German parental leave benefits on fertility. I use the unanticipated reform of 2007 to assess how a move from a means-tested to an earnings-related benefit affects higher-order births. By using data from the Mikrozensus, I find that the reform significantly affected the timing of higher-order births. Overall, mothers “just” affected by the reform initially reduce subsequent childbearing and start to compensate by the end of the third year. The negative effects are largely driven by lowest-income mothers, who are now worse-off and do not display any catch-up effects

Is Any Job Better than No Job? Life Satisfaction and Re-employment

Unemployment, Re-employment, Job quality, Life satisfaction, I31, J28,