Addressing the Legacy Costs in an NDC Reform: Conceptualization, Measurement, Financing
نویسندگان
چکیده
Addressing the Legacy Costs in an NDC Reform: Conceptualization, Measurement, Financing The paper provides a framework for the conceptualization, definition and estimation of legacy costs that need to be addressed in a reform that transforms an unfunded defined contribution (NDB) scheme into a notional (or non-financial) defined contribution (NDC) scheme. As the new contribution rate is fixed and, perhaps, reduced, paying for the accrued to date liabilities leaves a financing gap that needs to be estimated and financed, best outside the pension system if a less distorting financing form is available. The paper illustrates the proposed measurement approach with broad estimates under a hypothetical NDC reform in China. JEL Classification: H55, H68, J21, J26
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