defined contribution, Europe, externalities, financial system, funding, Other Publications, Labor market, social policy and social services, pensions

Shifting Perspectives in Pensions


This paper uses economic principles to analyse concepts used in the area of pensions. It discusses the issue of an efficient pension system and tipical dychotomies: unfunded versus funded, private versus public and defined contribution versus defined benefit. The paper uses the concept of Notional Defined Contribution, as a vehicle of ananlysis of central issues of pension economics. The concept is discussed in parallel with the concept of Financial Defined Contribution. The authors conclude that a good pension system mixes a portfolio of NDC, which is equivalent to a government bond portfolio and FDC, with a portfolio of non-government issues.