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Towards an equitable and sustainable points system. A proposal for pension reform in Belgium

Published online by Cambridge University Press:  27 April 2018

ERIK SCHOKKAERT ,
PIERRE DEVOLDER ,
JEAN HINDRIKS  and
FRANK VANDENBROUCKE
ERIK SCHOKKAERT
Affiliation:
Department of Economics, KU Leuven and CORE, Université catholique de Louvain (e-mail: erik.schokkaert@kuleuven.be)
PIERRE DEVOLDER
Affiliation:
ISBA, Université catholique de Louvain
JEAN HINDRIKS
Affiliation:
CORE, Economics School of Louvain, Université catholique de Louvain
FRANK VANDENBROUCKE
Affiliation:
University of Amsterdam (UvA)
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Abstract

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

D63H55J26Pension reformpoints systemautomatic adjustmentMusgrave rule
Type
Policy Paper/Brief
Information
Journal of Pension Economics & Finance , Volume 19 , Issue 1 , January 2020 , pp. 49 - 79
Copyright
Copyright © Cambridge University Press 2018 

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Footnotes

The ideas in this paper are the reflection of many stimulating discussions within the Commission Pension Reform 2020–2040. The authors thank the other members of the commission (Jos Berghman (+), Jacques Boulet, Bea Cantillon, Etienne de Callatay, Philippe De Mol, Ria Janvier, Alain Jousten, Françoise Masai, Hans Peeters, Gabriel Perl, Yves Stevens, Guy Van Camp, Elly Vandevelde and Koen Vleminckx) for their valuable input. The authors also thank Pierre Pestieau and an anonymous referee for their useful comments.

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