Work detail

Pension Systems in a World with Stagnant Population and Market Inefficiencies: A Comparison

Author: Mgr. Martin Štěpánek
Year: 2014 - summer
Leaders: PhDr. Jaromír Baxa Ph.D.
Work type: Finance, Financial Markets and Banking
Language: English
Pages: 118
Awards and prizes: M.A. with distinction from the Dean of the Faculty of Social Sciences for an excellent state-final examination performance and for an extraordinarily good masters diploma thesis.
Abstract: Financial unsustainability of pension systems in developed economies looms
large on the horizon due to increasing life expectancy and continuous drop in
fertility. In spite of a broad discussion, there has been but a little consensus
on appropriate remedy. Besides, the theoretical arguments supporting funded
pension systems often build upon the unrealistic assumption of stable financial
markets and fair transformation of saved funds into retirement benefits. This
work provides an insight into performance of various pension systems in real-
world conditions using large-scale simulations of an overlapping generations
model based on existing pension schemes in the Czech Republic, Sweden, and
Chile. Specifically, my model assumes adverse demographics, individual un-
certainty, volatile financial markets’ returns, and administrative costs to affect
social security systems and estimates magnitude of the effects. According to
the results, each pension system seems to be partially advantageous - in pro-
motion of economic growth, level of retirement benefits, or protection against
market risks - but no scheme is dominant or dominated overall




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