Altruism and fairness in a public pension system



on the future incomes of the young and middle-aged is uncertain as it depends again on the contribution
rate, income and age.

The last two scenarios involve situations that include the consequences of the ageing process. Two
(extreme) hypothetical situations are presented in the questionnaire. The fourth scenario (LB) describes
the situation in which pension contribution rates do not change but the total ageing effects are
intercepted by a decrease in the pension benefits. The respondents have been informed about the
amounts the young and middle-aged will have to save in this situation in order to compensate for the
decline in their public pension benefit. If they (will) save that amount of money, the present
consumption possibilities are negatively affected, but the future possibilities remain the same as they
are in the basic situation. The very last scenario (EB) more or less describes the opposite case. Now
the public pension benefit remains the same, but the contribution rate increases over time because of
the ageing effects. In this situation the income position of the contemporary old does not change. The
income position of the young and middle-aged decreases because of the higher contributions. Again,
the respondents have been informed about the possibility of maintaining current income at the expense
of a lower amount of old-age savings.

Table 3.1 Summary of the effects on the pension variables in each situation

code

ageing
included

old

pension

middle-aged

young

pension

ratio

contrib.

ratio

pension

contrib.

ratio

BS

no

0________

0_____

0

0

0

0

0

0

LC

no

-

-

?

-

-

?

-

-/0*

HC

no

+

+

?

+

+

?

+

+/0*

LB

yes

-

-

-

0__________

-

-

0_______

-

EB

yes

0

0

0

+

-

0

+

-

*) This effect depends on the age of the individual. For individuals of about 25 years old the ratio will hardly
change since they face a higher or lower contribution rate during their entire life. Correspondingly, they
receive a higher or lower benefit.

For each situation, table 3.1 gives for each generation an overview of the effects on the public pension
benefit, the contribution and the ratio between benefit and contribution. In the table, + indicates an
increase (relative to the basic situation), - a decrease, 0 no effect and ? an unknown effect.



More intriguing information

1. The name is absent
2. The name is absent
3. The name is absent
4. Education Responses to Climate Change and Quality: Two Parts of the Same Agenda?
5. Geography, Health, and Demo-Economic Development
6. Smith and Rawls Share a Room
7. Conservation Payments, Liquidity Constraints and Off-Farm Labor: Impact of the Grain for Green Program on Rural Households in China
8. An institutional analysis of sasi laut in Maluku, Indonesia
9. Une nouvelle vision de l'économie (The knowledge society: a new approach of the economy)
10. Momentum in Australian Stock Returns: An Update
11. Impact of Ethanol Production on U.S. and Regional Gasoline Prices and On the Profitability of U.S. Oil Refinery Industry
12. Political Rents, Promotion Incentives, and Support for a Non-Democratic Regime
13. 5th and 8th grade pupils’ and teachers’ perceptions of the relationships between teaching methods, classroom ethos, and positive affective attitudes towards learning mathematics in Japan
14. Tissue Tracking Imaging for Identifying the Origin of Idiopathic Ventricular Arrhythmias: A New Role of Cardiac Ultrasound in Electrophysiology
15. Spectral calibration of exponential Lévy Models [1]
16. The name is absent
17. A parametric approach to the estimation of cointegration vectors in panel data
18. Mean Variance Optimization of Non-Linear Systems and Worst-case Analysis
19. Prevalence of exclusive breastfeeding and its determinants in first 6 months of life: A prospective study
20. The name is absent