Designing Pension Systems with Coherent Funded Private Pillars Including Issues for Notional Defined Contribution Schemes

Price, William

World Bank, Washington, DC

关键词: PENSION FUNDS;    DEFINED CONTRIBUTION;    PRIVATE PENSION;    BENEFIT FORMULA;    PENSIONS;   

DOI  :  10.1596/1813-9450-8420
RP-ID  :  WPS8420

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper reviews the factors thatshould guide the design of private funded pensions to createa complete pension system alongside a notional definedcontribution—or public—component. It argues that a mix ofpublic and private pensions is the most effective option todeliver the best combination of pension outcomes. Pensiondesign should start with a vision for five core outcomes:coverage, adequacy, sustainability, efficiency, andsecurity. Thinking through these outcomes helps guidechoices for market structure, benefit type, contributions,investment strategy, and other factors. As well as technicaldesign, the governance, scale, and expertise of pensionfunds are critical for good investment and other outcomes.Regulators and supervisors should also focus on theseoutcomes and then work out how best to mitigate the risks toachieving them over time. These issues are relevant inrelation to any public pillar, but notional definedcontribution (NDC) systems bring clarity and transparency topolicy makers in the benefit formula. The NDC payout formulacan offer insights for how to improve the payout options infunded pillars. The clarity on the NDC formula also meansthat the joint distribution of public and private pensionscan be modeled.This is important because the precise NDCformula may have implications for optimal investmentstrategies for private pensions, given, for example, thenegative correlation between real per capita GDP growth andequity market returns over long periods.