Shifting Perspectives in Pensions

22 Pages Posted: 29 Oct 2004

See all articles by Marek Góra

Marek Góra

Warsaw School of Economics (SGH); IZA Institute of Labor Economics

Edward Palmer

Uppsala University

Date Written: October 2004


This paper addresses the questions of what is an economically efficient pension system, what are the externalities and what are the risks of the four alternative pension systems: financial defined contribution (FDC), notional or non-financial defined contribution (NDC), financial defined benefit (FDB) and non-financial defined benefit (NDB). A main contribution of the paper is the development of the concept of NDC, itself a new construction in pension economics. An important conclusion is that NDC is neutral in terms of externalities. It manages the risks and eliminates the negative externalities associated with traditional public NDB schemes, and in a manner similar to FDC schemes.

Keywords: pensions, NDC, FDC, notional account systems, financial account systems, funding, externalities, risks, defined contribution, government debt

JEL Classification: D6, D8, D91, G23, H23, H55, J26

Suggested Citation

Góra, Marek and Palmer, Edward, Shifting Perspectives in Pensions (October 2004). Available at SSRN: or

Marek Góra (Contact Author)

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

Edward Palmer

Uppsala University ( email )

Box 513
Uppsala, 751 20

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