Abstract

http://ssrn.com/abstract=1788972
 
 

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Voluntary Participation and Intergenerational Risk Sharing in a Funded Pension System


Roel M. W. J. Beetsma


University of Amsterdam - Research Institute in Economics & Econometrics (RESAM); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Tinbergen Institute - Tinbergen Institute Amsterdam (TIA); Netspar

Ward E. Romp


University of Amsterdam - Faculty of Economics and Business

Siert J. Vos


University of Amsterdam

March 16, 2011

Tinbergen Institute Discussion Paper No. 11-056/DSF19

Abstract:     
We explore the feasibility of a funded pension system with intergenerational risk sharing when participation in the system is voluntary. Typically, the willingness of the young to participate depends on their belief about the future young's willingness to do so. We characterise equilibria with voluntary participation and show that the likelihood of their existence increases with risk aversion and financial market uncertainty. We find that it is likely that mandatory participation is necessary to sustain a funded pension pillar and to let participants benefit from intergenerational risk sharing.

Number of Pages in PDF File: 31

Keywords: participation constraints, funded pensions, intergenerational risk sharing

JEL Classification: C61, H55, J32

working papers series


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Date posted: March 20, 2011  

Suggested Citation

Beetsma, Roel M. W. J. and Romp, Ward E. and Vos, Siert J., Voluntary Participation and Intergenerational Risk Sharing in a Funded Pension System (March 16, 2011). Tinbergen Institute Discussion Paper No. 11-056/DSF19. Available at SSRN: http://ssrn.com/abstract=1788972 or http://dx.doi.org/10.2139/ssrn.1788972

Contact Information

Roel M. W. J. Beetsma (Contact Author)
University of Amsterdam - Research Institute in Economics & Econometrics (RESAM) ( email )
Roetersstraat 11
Amsterdam
Netherlands
+31 20 525 5280 (Phone)
+31 20 525 4254 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
HOME PAGE: http://www.CESifo.de
Tinbergen Institute - Tinbergen Institute Amsterdam (TIA) ( email )
Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands
Netspar ( email )
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
Ward E. Romp
University of Amsterdam - Faculty of Economics and Business ( email )
Roeterstraat 11
1018 WB
Amsterdam
Netherlands
Siert J. Vos
University of Amsterdam ( email )
Spui 21
Amsterdam, 1018 WB
Netherlands
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