Towards an Equitable and Sustainable Points System. A Proposal for Pension Reform in Belgium
Journal of Pension Economics and Finance, doi/10.1017/S1474747218000112
Posted: 30 May 2018
Date Written: April 27, 2018
We describe the points system as proposed by the Belgian Commission for Pension Reform 2020–2040. Intragenerational equity can be realised through the allocation of points within a cohort. The intergenerational distribution is determined by fixing the value of a point for the newly retired and a sustainability parameter for the actual retirees. The value of the point links pensions to the average living standard of the employed population. We propose an automatic adjustment mechanism, in which a key role is played by the career length. This mechanism induces a balanced distribution of the burden of demographic and economic shocks over the different cohorts.
Keywords: Pension reform, points system, automatic adjustment, Musgrave rule
JEL Classification: D63, H55, J26
Suggested Citation: Suggested Citation