Categories
- ACTUARIAL DATA SCIENCE
- AFIR / ERM / RISK
- ASTIN / NON-LIFE
- BANKING / FINANCE
- DIVERSITY & INCLUSION
- EDUCATION
- HEALTH
- IACA / CONSULTING
- LIFE
- PENSIONS
- PROFESSIONALISM
- THOUGHT LEADERSHIP
- MISC
ICA LIVE: Workshop "Diversity of Thought #14
Italian National Actuarial Congress 2023 - Plenary Session with Frank Schiller
Italian National Actuarial Congress 2023 - Parallel Session on "Science in the Knowledge"
Italian National Actuarial Congress 2023 - Parallel Session with Lutz Wilhelmy, Daniela Martini and International Panelists
Italian National Actuarial Congress 2023 - Parallel Session with Kartina Thompson, Paola Scarabotto and International Panelists
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The mechanisms of nonfinancial defined contribution pension schemes (NDCs) are close to those of a fully funded defined contribution plan but under a pay-as-you-go framework. Of particular interest is how the accumulated capital of a deceased person is used, when the death occurs prior to retirement. Sweden is currently the only NDC country that distributes this capital, called survivor dividend (SD). Without distributing the SD, the scheme accumulates a reserve with no clear purpose. This paper aims to analyse to what extent the SD kept by most NDCs can be used to improve pension adequacy, and thus give low-income pensioners the financial support they need. We develop some theoretical models that allow to achieve the financial equilibrium of the scheme, which depends on how the SD is distributed among all socio-economic groups and which mortality tables is used (unisex versus group-specific). Our results indicate that the survivor dividend can be used to set up a minimum pension that benefit 66% of the pensioners and increase the average annual pension by 8.68%.
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