nep-age New Economics Papers
on Economics of Ageing
Issue of 2011‒10‒15
six papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. A general equilibrium evaluation of the sustainability of the new pension reforms in Italy By Riccardo Magnani
  2. Financial literacy and retirement planning : the Russian case By Klapper, Leora; Panos, Georgios A.
  3. Career Interruptions : How Do They Impact Pension Rights ?. By El Mekkaoui de Freitas, Najat; Duc, Cindy; Briard, Karine; Mage-Bertomeu, Sabine; Legendre, Berangère
  4. Are defined contribution pension schemes socially sustainable? A conceptual map from a macroprudential perspective By Giuseppe Marotta
  5. Pensions 4-2 au Québec : Vers un nouveau partenariat By Paul Gauthier; Richard Guay; Michel Magnan; Bryan Campbell; Laurence Allaire
  6. Continuous-Time Overlapping Generations Models By Hippolyte D'Albis; Emmanuelle Augeraud-Véron

  1. By: Riccardo Magnani (CEPN - Centre d'économie de l'Université de Paris Nord - CNRS : UMR7115 - Université Paris-Nord - Paris XIII, CEPII - Centre d'études prospectives et d'informations internationales - CEPII)
    Abstract: Most European countries have recently introduced pension system reforms to face the financial problem related to population ageing. Italy is not an exception. The reforms introduced during the Nineties (Amato Reform in 1992 and Dini Reform in 1995), even if they will produce a strong reduction in pension benefits, are generally considered not sufficient to adequately face the population ageing problem. For this reason, in 2004, the Berlusconi government introduced a new reform that increases the retirement age to 60 years from January 2008 onwards, to 61 years from 2010 and to 62 from 2014. In 2007, the left-wing government replaced this reform with a softer one that fixes the minimum retirement age at 58 from 2008. Using an applied overlapping-generations general equilibrium model with endogenous growth due to human capital accumulation, we analyse the impact of the new reforms on the macroeconomic system and in particular on the long-run sustainability of the pension system. We show that the increase in the retirement age would permit to reduce pension deficits in the short and medium run, while in the long run these reforms would become completely ineffective. ©
    Keywords: pension reforms, applied OLG models, immigration, endogenous growth
    Date: 2011
  2. By: Klapper, Leora; Panos, Georgios A.
    Abstract: The authors examine the association of financial literacy with retirement planning in Russia, a country with a relatively old and rapidly aging population, large regional disparities, and a rapidly emerging financial market. They find that only 36.3 percent of respondents in the sample understand interest compounding and only half can answer a simple question about inflation. In a country with widespread public pension provisions, they find that financial literacy is significantly and positively related to retirement planning involving private pension funds and schemes. Thus, along with encouraging the availability of private retirement plans, efforts to improve financial literacy could be pivotal to the expansion of the use of such schemes.
    Keywords: Financial Literacy,Pensions&Retirement Systems,Emerging Markets,Debt Markets,Gender and Law
    Date: 2011–10–01
  3. By: El Mekkaoui de Freitas, Najat; Duc, Cindy; Briard, Karine; Mage-Bertomeu, Sabine; Legendre, Berangère
    Abstract: The aim of this article is to analyse the question of career interruptions and to evaluate their impact on pension retirement for French private sector workers. Using the last French survey on households' wealth (2003-2004), we first study the career set-backs for individuals born between 1937 and 1949. We highlight the new trends in professional paths. The risk of unemployment and job flexibility has sharply risen. As a consequence, some cohorts appear to be more exposed to career interruptions. Second, we determine how pension rights for French employees are affected by different career accidents. We consider unemployment, part-time employment and inactivity periods. Our results show how, by compensating for some career accidents, the French legislation allows individuals to receive, in some cases, the same level of social security pension that they would have received with a smooth professional path.
    Keywords: France; Social Security; Retirement; Pension; Part Time;
    JEL: J32 J22 D14 H55 E24 J26
    Date: 2011–07
  4. By: Giuseppe Marotta
    Abstract: If the combined retirement income, provided by public and private defined contribution (DC) pension schemes, falls below socially acceptable standards, there is a political risk that consensus seeker policymakers could yield to pressures to commit future fiscal revenues. These contingent liabilities, when incorporated in markets’ expectations, are bound to create spillovers on sovereign risk, with negative feedback loops on the capital adequacy of banks and of other intermediaries, owing to losses on their government paper. Among the causes of reduced annuities out of the final assets in DC pension funds is an equity risk premium much lower than the commonly values advertised by the industry and by policymakers. From a macroprudential perspective, this political risk should be taken into account in stress tests assessing banks’ resilience to financial shocks.
    Keywords: pensions, equity risk premium, political risk, sovereign risk, stress test
    JEL: D10 G23 H55 J14
    Date: 2011–10
  5. By: Paul Gauthier; Richard Guay; Michel Magnan; Bryan Campbell; Laurence Allaire
    Abstract: <P>Les Québécois ayant des revenus de 40 000 $ et moins, et ayant contribué au RRQ toute leur carrière, sont généralement bien couvert par les programmes de revenus de retraite actuellement en vigueur, lesquels sont aussi présentés comme les Piliers I et II des systèmes de pension québécois et canadien. <p> Moins bien couverts sont les travailleurs du secteur privé avec des revenus dépassant les 40 000 dollars qui ne font pas partie d’un régime de pension d’employeur. Leur nombre serait de l’ordre de 800 000 travailleurs. <p> Les enjeux auxquels font face ces travailleurs sont d’autant plus grands que la réalité financière indique que l’épargne doit commencer lorsque l’on est jeune pour avoir un effet tangible sur les revenus à la retraite. Toutefois, cette réalité incontournable de la planification financière se confronte aux besoins et exigences de la vie pratique au jour le jour. À trente ans, les soucis reliés à la retraite sont moins pressants que le développement de sa carrière, l’établissement et le support d’une famille et le maintien d’un style général de vie approprié selon ses revenus présents et attendus. Dans ce contexte, il est probablement trop optimiste de présumer que des décisions rationnelles et optimales d’épargne soient effectivement prises. Par contre, l’objectif d’épargner en vue de la retraite demeure important. En effet, l’espérance de vie augmente et ce phénomène entraîne non seulement une période plus longue à financer pour la retraite mais aussi une augmentation potentielle de dépenses médicales, avec la crainte que certaines ne soient pas complètement prises en charge par le système de santé public. Les Québécois sont-ils prêts à faire face à une telle éventualité? <p> L’objectif principal de ce rapport est de proposer des mécanismes à travers lesquels les Québécois sont encouragés à épargner davantage. Ceux-ci sont regroupés sous le titre général de Pensions 4-2.
    Keywords: , Pensions, REER,financement retraite
    Date: 2011–10–01
  6. By: Hippolyte D'Albis (LERNA - Economie des Ressources Naturelles - INRA : UR1081 - CEA : DPG - Université des Sciences Sociales - Toulouse I); Emmanuelle Augeraud-Véron (MIA - Mathématiques, Image et Applications - Université de La Rochelle : EA3165)
    Abstract: Age structured populations are studied in economics through overlapping generations models. These models allow for a realistic characterization of life-cycle behaviors and display intertemporal equilibrium that are not necessarily efficient. This article uses the latest developments in continuous time overlapping generations models to show the influence of the vintage structure of the population on the volatility of intertemporal prices. Permanent cycles can be found on the neighborhood of steady-states while the transitional dynamics are generically governed by short run fluctuations.
    Keywords: overlapping generations; continuous time; life-cycle; intertemporal prices.
    Date: 2011

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