From Traditional DB to Notional DC Systems: The Pension Reform Process in Sweden, Italy, and Germany

Abstract

This paper provides a critical review of the pension reform strategy that turns defined benefits (DB) public pay-as-you-go-systems into notional defined contribution (NDC) systems. We show that properly designed NDC public pension systems contain powerful economic and political mechanisms that may facilitate pension reform, but that the distinction between public NDC and DB systems is more ambiguous than usually claimed. (JEL: H55, J14, J26)