Lashed to the mast?The politics of notional defined contribution pension reforms

Lashed to the mast?

The politics of notional defined contribution pension reforms

Brooks

Sarah M.

Brooks, Sarah M.

Author

Weaver

R. Kent

Weaver, R. Kent

Author

text

working paper

Chestnut Hill, Mass. Center for Retirement Research at Boston College20052005monographic

Chestnut Hill, Mass.

Center for Retirement Research at Boston College

2005

monographic

Englisheng

English

eng

electronicapplication/pdfborn digital

electronic

application/pdf

born digital

Over the past decade, a number of countries have adopted a new form of pension system known as "notional defined contribution" (NDC) pensions. Like traditional defined benefit (DB) pensions, NDC pensions operate largely on a pay-as-you-go basis, but base benefits on total lifetime contributions rather than those in a specified number of peak earnings years. Payroll tax rates are (at least in theory) permanently fixed, while adjustments necessitated by demographic change and slow economic growth are automatically made on the benefit side. The authors argue that adoption of NDC-based reforms reflects political as well as policy considerations. The article analyzes a variety of conditions that have led some countries to adopt NDC-based reforms while such reforms have not even reached the agenda in others. The authors point out a number of problems that may arise during implementation of NDC-based reforms that undercut their potential benefits, and argue that erosion of NDC-based reforms is more likely than outright reversal.

Sarah M. Brooks and R. Kent Weaver.

CRR WP2005-4

CRR WP

2005-4

http://crr.bc.edu/images/stories/Working_Papers/wp_2005-04.pdf

MChBEnglisheng

MChB

Englisheng

English

eng