Reference : Conceptualizing, Measuring and Financing the Legacy Costs in an NDC Reform
Scientific journals : Article
Business & economic sciences : Economic systems & public economics
Conceptualizing, Measuring and Financing the Legacy Costs in an NDC Reform
Jousten, Alain mailto [Université de Liège - ULg > HEC-Ecole de gestion de l'ULg : UER > Théorie monétaire et macroéconomie >]
Holzmann, Robert [> >]
Journal of Pension Economics & Finance
606 - 630
Yes (verified by ORBi)
[en] pensions ; pay-as-you-go ; notional defined contribution
[en] The paper provides a framework for the conceptualization, definition and measurement of the legacy
costs that needs to be addressed in a reform that transforms an unfunded (or non‐financial) defined
benefit (NDB) scheme into an equally unfunded notional (or non‐financial) defined contribution (NDC)
scheme. During a transition from NDB to NDC a financing gap typically arises due to accrued to date
liabilities from the old system in excess of the NDC scheme’s sustainable flow of benefits. This gap ‐ or
legacy cost ‐ needs to be estimated and financed. We illustrate different techniques to gauge the scope
of the cost. The paper applies the proposed approach to a hypothetical NDC reform in China.
Researchers ; Professionals

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