Pensions past and present same equation, new constraints

A notable characteristic of the pension issue is the extreme simplicity of the underlying accounting equation, the one which describes the relationship between three parameters: retirement age, contribution rates and the relative level of pensions. The text published in 1946 by Paul Vincent is by no...

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Bibliographic Details
Published in:Population (English ed. : 2002) 2016-04, Vol.71 (2), p.327-329
Main Author: Blanchet, Didier
Format: Article
Language:English
Subjects:
Debates
Demography
Inflation
Investments
Pensions
Retirement
Seventieth Anniversary of Population
Wealth
Online Access:Get full text
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Summary:A notable characteristic of the pension issue is the extreme simplicity of the underlying accounting equation, the one which describes the relationship between three parameters: retirement age, contribution rates and the relative level of pensions. The text published in 1946 by Paul Vincent is by no means obsolete in this respect; the terms he uses to describe this equation could well be found, practically unchanged, in most current publications.The arguments he deploys to rule out a general return to a funded pension system also remain very contemporary. He focuses on a particular form of this system:investments with fixed nominal returns directly exposed to the risk of inflation. Today, the debate would be centred rather on the performance of financial markets, their potential contribution to the financing of the economy, counter balanced by other forms of risk to which they expose contributors. But what remains approximately true is that no system is independent of demographic constraints: pensions are necessarily drawn from the wealth created at the same time by the working population.This idea was used repeatedly at the height of the debate on funded and pay-as-you-go systems in the 1990s.
ISSN:1634-2941
1958-9190