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Are the Pension Systems of Low Fertility Populations Sustainable?

Chapter
Part of the The Springer Series on Demographic Methods and Population Analysis book series (PSDE, volume 39)

Abstract

The decline in fertility levels to below replacement level is a common trend that will lead to population decline and reduce the pressure on the environment and on natural resources. On the other hand, it will also cause population aging and higher pension burdens of pay-as-you-go systems. Funded pension systems transfer cohorts’ saving to consumption and their pension burdens are invariant to fertility change. Comparing the difference between the pension burdens of the two systems in certain periods could provide relevant information to the decision on whether or not to establish funded pension systems. A time-based cohort old-age dependency ratio is proposed in this chapter, which measures the pension burden of a funded system and is comparable to that of a pay-as-you-go system. This time-based cohort old-age dependency ratio can be computed for all the countries and areas of the world, using only demographic data. Examples are given for China, Japan and the Republic of Korea.

Keywords

Pension systems Dependency ratios Period Cohort 

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Copyright information

© Springer International Publishing Switzerland 2016

Authors and Affiliations

  1. 1.United Nations Population DivisionUnited NationsNew YorkUSA

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