On the Economics and Scope of Implicit Pension Debt: An International Perspective

Abstract

This paper examines the concept and scope of unfunded public pension liabilities, or implicit pension debt (IPD), from an international perspective. First, the paper discusses the importance and public finance background of IPD. Second, it presents and compares different methods for estimating IPD. Third, it provides international estimates of IPD based on accrued-to-date or termination liability methods with consistent assumptions across all countries using the World Bank's ``Pension Reform Options Simulation Toolkit'' (PROST) computer model. The policy conclusions stress the need for standardized international reporting of this indicator.