Optimal design of raising retirement age
Population aging threatens the future fiscal balance of the public pension system across many countries, and policymakers have often undertaken parametric pension reform as a solution. However, any reform will inevitably introduce intergenerational conflicts and thus needs a gradual transition to al...
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sg-ntu-dr.10356-1805482024-10-17T15:36:41Z Optimal design of raising retirement age Zhang, Jinggong Zhu, Xiaobai Nanyang Business School Business and Management Retirement age Welfare Population aging threatens the future fiscal balance of the public pension system across many countries, and policymakers have often undertaken parametric pension reform as a solution. However, any reform will inevitably introduce intergenerational conflicts and thus needs a gradual transition to allow individuals to slowly adapt to their new retirement plans. In this article, we study the optimal schedule for lifting the full retirement age using the optimal control approach. Given the aggregate actuarial loss of the pension system, our target is to smoothly distribute the deficit across different generations, subject to a fairness constraint that prohibits any cohorts from taking advantage of others. We further illustrate our results using China as an empirical example and investigate the impacts of different actuarial assumptions, benefit accrual formulae, and population structures. Ministry of Education (MOE) Nanyang Technological University Submitted/Accepted version JZ acknowledges the research funding support from the Nanyang Technological University Startup Grant(04INS000509C300) and the Singapore Ministry of Education Academic Research Fund Tier 1 Grant (RG55/20). XZacknowledges research funding from the Research Grants Council of the Hong Kong Special Administrative Region, China(Project No. CUHK 24615523). 2024-10-11T05:10:25Z 2024-10-11T05:10:25Z 2024 Journal Article Zhang, J. & Zhu, X. (2024). Optimal design of raising retirement age. North American Actuarial Journal. https://dx.doi.org/10.1080/10920277.2024.2311666 1092-0277 https://hdl.handle.net/10356/180548 10.1080/10920277.2024.2311666 2-s2.0-85202633253 en 04INS000509C300 RG55/20 North American Actuarial Journal © 2024 Society of Actuaries. All rights reserved. This article may be downloaded for personal use only. Any other use requires prior permission of the copyright holder. The Version of Record is available online at http://doi.org/10.1080/10920277.2024.2311666. application/pdf |
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Business and Management Retirement age Welfare Zhang, Jinggong Zhu, Xiaobai Optimal design of raising retirement age |
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Population aging threatens the future fiscal balance of the public pension system across many countries, and policymakers have often undertaken parametric pension reform as a solution. However, any reform will inevitably introduce intergenerational conflicts and thus needs a gradual transition to allow individuals to slowly adapt to their new retirement plans. In this article, we study the optimal schedule for lifting the full retirement age using the optimal control approach. Given the aggregate actuarial loss of the pension system, our target is to smoothly distribute the deficit across different generations, subject to a fairness constraint that prohibits any cohorts from taking advantage of others. We further illustrate our results using China as an empirical example and investigate the impacts of different actuarial assumptions, benefit accrual formulae, and population structures. |
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Nanyang Business School |
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Nanyang Business School Zhang, Jinggong Zhu, Xiaobai |
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Article |
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Zhang, Jinggong Zhu, Xiaobai |
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Zhang, Jinggong |
title |
Optimal design of raising retirement age |
title_short |
Optimal design of raising retirement age |
title_full |
Optimal design of raising retirement age |
title_fullStr |
Optimal design of raising retirement age |
title_full_unstemmed |
Optimal design of raising retirement age |
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optimal design of raising retirement age |
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2024 |
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https://hdl.handle.net/10356/180548 |
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1814777739643715584 |