Towards an Equitable and Sustainable Points System. A Proposal for Pension Reform in Belgium
By Erik Schokkaert (Catholic University of Leuven (KUL)), Pierre Devolder (Catholic University of Louvain), Jean Hindriks (University of London – School of Economics and Finance) & Frank Vandenbroucke (University of Amsterdam)
We describe the points system as proposed by the Belgian Commission for Pension Reform 2020–2040. Intragenerational equity can be realised through the allocation of points within a cohort. The intergenerational distribution is determined by fixing the value of a point for the newly retired and a sustainability parameter for the actual retirees. The value of the point links pensions to the average living standard of the employed population. We propose an automatic adjustment mechanism, in which a key role is played by the career length. This mechanism induces a balanced distribution of the burden of demographic and economic shocks over the different cohorts.
Source: SSRN
