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Redistribution in Dutch Second-Pillar Pension Schemes: Static and Market Consistent Analyses of both Inter- and Intragenerational Redistribution

Vries, F.J. de (2014) Redistribution in Dutch Second-Pillar Pension Schemes: Static and Market Consistent Analyses of both Inter- and Intragenerational Redistribution.

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Abstract:This thesis investigates both inter- and intragenerational redistribution within Dutch second-pillar defined benefit schemes by using both a static and a market consistent model. We have shown that redistribution occurs between different socio-economic groups and we have calculated its magnitude using both models. It is well known from literature that redistribution occurs due to differences in life expectancy and due to the time value of money. However, we show that the redistribution effects of uniform pricing depend on more factors, like the term structure of interest rates, the wage increase during someone's career, the initial funding ratio of the pension fund and the financial policies of the pension fund. We barely observe the standard redistribution patterns if we allow for the factors outlined above by using input variables that are in line with the current financial markets. These factors are fund- and time dependent. This makes redistribution in Dutch DB pension schemes not a static phenomenon, but a fund- and time dependent phenomenon.
Item Type:Essay (Master)
Clients:
Towers Watson, Amselveen, The Netherlands
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:83 economics
Programme:Industrial Engineering and Management MSc (60029)
Link to this item:http://purl.utwente.nl/essays/66024
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