In search of financially sustainable pension systems: three benchmark models
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One of the great dilemmas facing countries around the world is to define a pension system that is financially sustainable in the face of increasing life expectancy, falling fertility rates and the consequent lack of generational replacement. Globally, pension reforms in countries with more advanced aging processes have focused on implementing parametric reforms and incorporating automatic adjustments of the main parameters to share productivity, financial and demographic risks.
In this article we present the advantages and disadvantages of three benchmark pension models: Sweden, the Netherlands and Denmark.
With notional accounts, each worker has a fictitious account in which the contributions they make are included, as well as the theoretical yield generated by these contributions.
