Optimal Planning of Public Pension System under Uncertainty for Realizing Intergenerational Equity and Financial Sustainability

Abstract

In this paper, we propose a generation-based funding scheme of the public pension system in order to cope with the intergenerational inequity and financial failure. We simulate the variation of contribution-benefit ratio and government contribution in order to analyze the intergenerational equity and financial sustainability. It is shown that the generation-based funding scheme could keep the fixed contribution-benefit ratio and the same government contribution as today or less.