Public pension planning on the basis of generation-based funding scheme for intra-generational equity

Abstract

In this paper, we propose a method of determining the pension in the generation-based funding scheme. In this proposal, we include two types of pensions. One is the payment-amount related pension and the other is the payment-times related pension. We set the ratio of the total amount of payment-amount related pension to the total amount of both pensions (income gap operator), and simulate fiscal changes and income gaps when the proposed method is applied. As a result, we show the possibility of a correcting income gaps, and that intergenerational equity and fiscal sustainability are not affected by nonpayment of the insurance.