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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Main Authors: Zhang, Jinggong, Zhu, Xiaobai
Other Authors: Nanyang Business School
Format: Article
Language:English
Published: 2024
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Online Access:https://hdl.handle.net/10356/180548
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Institution: Nanyang Technological University
Language: English
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spelling 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
institution Nanyang Technological University
building NTU Library
continent Asia
country Singapore
Singapore
content_provider NTU Library
collection DR-NTU
language English
topic Business and Management
Retirement age
Welfare
spellingShingle Business and Management
Retirement age
Welfare
Zhang, Jinggong
Zhu, Xiaobai
Optimal design of raising retirement age
description 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.
author2 Nanyang Business School
author_facet Nanyang Business School
Zhang, Jinggong
Zhu, Xiaobai
format Article
author Zhang, Jinggong
Zhu, Xiaobai
author_sort 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
title_sort optimal design of raising retirement age
publishDate 2024
url https://hdl.handle.net/10356/180548
_version_ 1814777739643715584