Differentiating Indexation in Dutch Pension Funds

We investigate numerically how indexation of funded pensions for inflation can be differentiated across the various groups of fund participants. The pension arrangement is modelled after the Dutch situation. While the aggregate welfare consequences are small, group-specific consequences are more substantial with the workers and future born losing and retirees benefitting from a shift away from uniform indexation. Those welfare shifts result from systematic redistribution of welfare rather than shifts in the benefit of risk sharing provided by the system.indexation, funded pensions, welfare effects, pension buffers, stochastic simulations

Participation Constraints in Pension Systems

We explore voluntary participation in pension arrangements. Individuals only participate when participation is more attractive than autarky. The benefit of participation is that risks can be shared with future generations. We apply our analysis to a pay-as-you-go system, a funded system without buffers and a funded system with buffers. Buffers play a particularly interesting role, because they raise the sensitivity of the contributions to the asset returns. In particular, compared to a system without buffer requirements, they require higher contributions when asset returns are low. Moreover, individual contributions may be increasing or decreasing in the size of the young cohort, depending on whether the fund has more or less reserves than required. We confine ourselves to recursive settings and study equilibria characterised by thresholds on the contribution that young generations are prepared to make assuming that the future young apply the same threshold. For standard parameter settings two such equilibria exist, of which only the one with the higher threshold is consistent with the initial young being prepared to start the system. Finally, we explore the social welfare maximising policy parameter settings for various levels of uncertainty and risk aversion

CESifo Working Paper no. 3652

Abstract There is substantial consensus in the literature that positive uncertainty shocks predict a slowdown of economic activity. However, using U.S. data since 1950 we show that the macroeconomic response pattern to stock market volatility shocks has changed substantially over time. The negative response of GDP growth to such shocks has become smaller over time. Further, while during earlier parts of our sample both a slowdown in consumption and investment growth contribute to a reduction of GDP growth, during later parts, only the investment reaction contributes to the GDP slowdown. A variance decomposition for consumption growth shows that the contribution of stock market volatility becomes negligible as we go from earlier to later parts of the sample, while the corresponding decomposition for investment growth reveals an increase in the role of stock market volatility. JEL-Code: E200, E310, E400

Voluntary Participation and Intergenerational Risk Sharing in a Funded Pension System

We explore the feasibility of a funded pension system with intergenerational risk sharing when participation in the system is voluntary. Typically, the willingness of the young to participate depends on their belief about the future young's willingness to do so. We characterise equilibria with voluntary participation and show that the likelihood of their existence increases with risk aversion and financial market uncertainty. We find that mandatory participation is often necessary to sustain a funded pension pillar and to let participants benefit from intergenerational risk sharing

Apakah ketimpangan menyebabkan inflasi? Tinjauan ekonomi politik inflasi, perpajakan dan utang pemerintah

A democratic society in which the distribution of wealth is unequal elects political parties that are likely to represent the interest of poor people. It is in the interest of clientele of the resulting governments to attempt to levy inflation taxes in order to erode the real value of debt service and redistributive from the rich to poor

Perceived use of critical reading strategies amongst form four students of SMk Kampong Jawa, Klang, Selangor / Muhammad Zamir Zulkifli

Kaji selidik ini menyiasat penggunaan strategi membaca secara kritikal yang digunakan oleh 84 orang pelajar tingkatan empat dari sebuah sekolah menengah. Para pelajar ini dipilih dari tiga buah kelas yang kemudiannya dikategorikan mengikut gred peperiksaan PMR kertas Bahasa Inggeris yang mereka perolehi. Gred para pelajar ini digunakan untuk mengenalpasti kemahiran bahasa mereka samada tinggi, sederhana, dan rendah. Para pelajar ini diminta untuk menjawab borang kaji selidik yang diadaptasi dari Mokhtari dan Sheorey (2002). Borang kaji selidik ini mempunyai 30 item yang dikategorikan mengikut tiga kategori iaitu strategi global, strategi penyelesaian masalah dan strategi sokongan. Data yang diperolehi dari borang kaji selidik ini dianalisa untuk mengkaji kekerapan strategi yang digunakan oleh para pelajar, mengenalpasti kekerapan paling tinggi bagi kategori yang digunakan, dan melihat perbezaan penggunaan strategi membaca secara kritikal mengikut kemahiran bahasa para pelajar. Dapatan kajian ini mendedahkan bahawa kategori strategi membaca secara kritikal yang mempunyai kekerapan paling tinggi dicatatkan para pelajar adalah strategi penyelesaian masalah disusuli dengan strategi sokongan seterusnya strategi global. Dapatan kajian ini juga telah menunjukkan bahawa pelajar berkemahiran bahasa tinggi mencatatkan kekerapan penggunaan strategi membaca secara kritikal paling tinggi. Manakala, pelajar berkemahiran bahasa lemah mencatatkan pencapaian kedua tertinggi diikuti dengan pelajar berkemahiran bahasa sederhana. Beberapa persamaan dan perbezaan penggunaan strategi membaca secara kritikal antara ketiga-tiga tahap juga ditunjukkan dalam dapatan kajian ini. Kaji selidik ini turut menyediakan beberapa implikasi dan cadangan untuk penambahbaikan untuk kajian masa hadapan

Sustainability of participation in collective pension schemes: An option pricing approach

This paper contributes to the discussion about mandatory participation in collective funded pension schemes. It explores under what circumstances individual participants exercise the option to exit such a scheme if participation is voluntary. We begin by showing how the willingness to participate increases if the period over which the option is valid becomes longer. Then, we demonstrate how the pension fund’s set of policy instruments can be deployed to minimize the likelihood that any cohort exits the pension scheme. The instruments consist of contribution and indexation policies. Recovery of the funding ratio, i.e. The ratio of assets over liabilities, to its regulatory target level may be based on uniform contributions or age-dependent contributions. Specifically, while the value of the exit option deters younger workers from exiting the pension fund, a uniform contribution policy encourages older workers to stay in the pension scheme