NDC Schemes and Heterogeneity in Longevity : Proposals for Redesign

A positive relationship between lifetime income and life expectancy leads to a redistribution mechanism when the average cohort life expectancy is applied for annuity calculation. Such a distortion puts into doubt the main features of the NDC (nonf...

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Main Authors:	Holzmann, Robert, Alonso-García, Jennifer, Labit-Hardy, Heloise, Villegas, Andrés M.
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2019
Subjects:	LIFE EXPECTANCY PENSION SYSTEMS GENDER NONFINANCIAL DEFINED CONTRIBUTIONS
Online Access:	http://documents.worldbank.org/curated/en/551391556883357303/NDC-Schemes-and-Heterogeneity-in-Longevity-Proposals-for-Redesign http://hdl.handle.net/10986/31637

id	okr-10986-31637
recordtype	oai_dc
spelling	okr-10986-316372021-05-25T09:23:36Z NDC Schemes and Heterogeneity in Longevity : Proposals for Redesign Holzmann, Robert Alonso-García, Jennifer Labit-Hardy, Heloise Villegas, Andrés M. LIFE EXPECTANCY PENSION SYSTEMS GENDER NONFINANCIAL DEFINED CONTRIBUTIONS A positive relationship between lifetime income and life expectancy leads to a redistribution mechanism when the average cohort life expectancy is applied for annuity calculation. Such a distortion puts into doubt the main features of the NDC (nonfinancial defined contribution) scheme and calls for alternative designs to compensate for the heterogeneity. This paper explores five key mechanisms of compensation: individualized annuities; individualized contribution rates; a two-tier contribution structure with socialized and individual rates; and two supplementary two-tier approaches to deal with the income distribution tails. Using unique American and British data, the analysis indicates that both individualized annuities and two-tier contribution schemes are feasible and effective and thus promising policy options. A de-pooling by gender will be required, however. 2019-05-06T21:40:29Z 2019-05-06T21:40:29Z 2019-04 Working Paper http://documents.worldbank.org/curated/en/551391556883357303/NDC-Schemes-and-Heterogeneity-in-Longevity-Proposals-for-Redesign http://hdl.handle.net/10986/31637 English Social Protection and Jobs Discussion Paper,no. 1913; CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Working Paper United Kingdom United States
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	LIFE EXPECTANCY PENSION SYSTEMS GENDER NONFINANCIAL DEFINED CONTRIBUTIONS
spellingShingle	LIFE EXPECTANCY PENSION SYSTEMS GENDER NONFINANCIAL DEFINED CONTRIBUTIONS Holzmann, Robert Alonso-García, Jennifer Labit-Hardy, Heloise Villegas, Andrés M. NDC Schemes and Heterogeneity in Longevity : Proposals for Redesign
geographic_facet	United Kingdom United States
relation	Social Protection and Jobs Discussion Paper,no. 1913;
description	A positive relationship between lifetime income and life expectancy leads to a redistribution mechanism when the average cohort life expectancy is applied for annuity calculation. Such a distortion puts into doubt the main features of the NDC (nonfinancial defined contribution) scheme and calls for alternative designs to compensate for the heterogeneity. This paper explores five key mechanisms of compensation: individualized annuities; individualized contribution rates; a two-tier contribution structure with socialized and individual rates; and two supplementary two-tier approaches to deal with the income distribution tails. Using unique American and British data, the analysis indicates that both individualized annuities and two-tier contribution schemes are feasible and effective and thus promising policy options. A de-pooling by gender will be required, however.
format	Working Paper
author	Holzmann, Robert Alonso-García, Jennifer Labit-Hardy, Heloise Villegas, Andrés M.
author_facet	Holzmann, Robert Alonso-García, Jennifer Labit-Hardy, Heloise Villegas, Andrés M.
author_sort	Holzmann, Robert
title	NDC Schemes and Heterogeneity in Longevity : Proposals for Redesign
title_short	NDC Schemes and Heterogeneity in Longevity : Proposals for Redesign
title_full	NDC Schemes and Heterogeneity in Longevity : Proposals for Redesign
title_fullStr	NDC Schemes and Heterogeneity in Longevity : Proposals for Redesign
title_full_unstemmed	NDC Schemes and Heterogeneity in Longevity : Proposals for Redesign
title_sort	ndc schemes and heterogeneity in longevity : proposals for redesign
publisher	World Bank, Washington, DC
publishDate	2019
url	http://documents.worldbank.org/curated/en/551391556883357303/NDC-Schemes-and-Heterogeneity-in-Longevity-Proposals-for-Redesign http://hdl.handle.net/10986/31637
_version_	1764474819484581888

NDC Schemes and Heterogeneity in Longevity : Proposals for Redesign

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