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Adjustment mechanisms and intergenerational actuarial neutrality in pension reforms
Author(s) -
Meneu Robert,
Devesa Enrique,
Devesa Mar,
Domínguez Inmaculada,
Encinas Borja
Publication year - 2016
Publication title -
international social security review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.349
H-Index - 28
eISSN - 1468-246X
pISSN - 0020-871X
DOI - 10.1111/issr.12096
Subject(s) - pension , life expectancy , neutrality , context (archaeology) , economics , population ageing , actuarial science , expectancy theory , population , pension system , sociology , political science , law , demography , finance , paleontology , management , biology
In the context of the reform of defined benefit pension systems under population ageing, we focus on the introduction of automatic adjustment mechanisms linked to life expectancy. Our goal is to establish a relationship between changes in the key parameters of the pension system and changes in life expectancy, applying the principle of intergenerational actuarial neutrality. For a defined benefit pension scheme, we first obtain the fundamental adjustment equation and then, for particular cases, we derive different designs of automatic adjustment mechanisms depending on the involved parameter. We include a numerical application only for illustrative purposes.