A 'Swedish' Actuarial Balance Sheet for a Notional Defined Contribution Pension Scheme with Disability and Retirement Benefits

International Social Security Review Vol 70 (3), 79-104.

Posted: 22 Mar 2016 Last revised: 6 Feb 2019

See all articles by Juan Manuel Pérez Salamero González

Juan Manuel Pérez Salamero González

University of Valencia - Department of Financial Economics

Manuel Ventura-Marco

University of Valencia - Faculty of Economics

Carlos Vidal-Meliá

University of Valencia - Department of Financial Economics

Date Written: June 16, 2016

Abstract

This paper proposes a “Swedish” type actuarial balance sheet for a notional defined contribution scheme embedding disability insurance within the retirement pension system. The underlying framework supporting the actuarial balance relies on a multistate overlapping generations model that includes the so-called survivor dividend and a minimum pension benefit for both contingencies. The proposed ABS splits the system into two parts: the actuarial part (pure NDC) and the redistributive part, which includes the assets and liabilities originating from non-contributory rights. The paper also contains a numerical example that sheds light on the real applicability of our proposal and confirms that the model works reasonably well. The results obtained make sense and provide us with some useful values regarding the impact of introducing a minimum pension on the system's financial equilibrium. The model has practical implications that could be of interest to policy makers, given that it integrates actuarial and social aspects of public pensions and discloses the real cost of redistribution through minimum pensions.

Keywords: Disability Insurance, Minimum Pensions, Notional defined contribution, Pay-as-you-go, Pension Accounting, Retirement, Sweden

JEL Classification: G22, H55, H83, J26, M48

Suggested Citation

Pérez Salamero González, Juan Manuel and Ventura-Marco, Manuel and Vidal-Meliá, Carlos, A 'Swedish' Actuarial Balance Sheet for a Notional Defined Contribution Pension Scheme with Disability and Retirement Benefits (June 16, 2016). International Social Security Review Vol 70 (3), 79-104., Available at SSRN: https://ssrn.com/abstract=2752921 or http://dx.doi.org/10.2139/ssrn.2752921

Juan Manuel Pérez Salamero González

University of Valencia - Department of Financial Economics ( email )

Avda. del Tarongers, s/n
46022 Valencia
Spain

Manuel Ventura-Marco

University of Valencia - Faculty of Economics ( email )

Valencia, E-46022
Spain

Carlos Vidal-Meliá (Contact Author)

University of Valencia - Department of Financial Economics ( email )

Avda. del Tarongers, s/n
46022 Valencia
Spain

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