Political Stress and the Sustainability of Funded Pension Schemes: Introduction of a Financial Theory

This study introduces multiplayer game in the modern pension market. Particularly, this study claims that low earners and high earners have different interests when playing in funded pension market scheme. This differentiating is enabled by avoiding the entire society as a single earning cohort. Thi...

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Autor principal:	Ishay Wolf
Formato:	article
Lenguaje:	EN
Publicado:	MDPI AG 2021
Materias:	defined contribution pay-as-you-go put option social security Risk in industry. Risk management HD61 Finance HG1-9999
Acceso en línea:	https://doaj.org/article/badd61b280d6496aac23727860db5d9b
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spelling	oai:doaj.org-article:badd61b280d6496aac23727860db5d9b2021-11-25T18:08:33ZPolitical Stress and the Sustainability of Funded Pension Schemes: Introduction of a Financial Theory10.3390/jrfm141105251911-80741911-8066https://doaj.org/article/badd61b280d6496aac23727860db5d9b2021-11-01T00:00:00Zhttps://www.mdpi.com/1911-8074/14/11/525https://doaj.org/toc/1911-8066https://doaj.org/toc/1911-8074This study introduces multiplayer game in the modern pension market. Particularly, this study claims that low earners and high earners have different interests when playing in funded pension market scheme. This differentiating is enabled by avoiding the entire society as a single earning cohort. This study using financial position, demonstrates a socio-economic anomaly in the funded pension system, which is in favor of high-earning cohorts at the expense of low-earning cohorts. This anomaly is realized by a lack of insurance and exposure to financial and systemic risks. Furthermore, the anomaly could lead to a pension re-reform back to an unfunded scheme system, due mostly to political pressure. This study found that a minimum pension guarantee is a rebalance mechanism for this anomaly, which increases the probability of a sustainable pension scheme. Nowadays when countries try to balance between social expenses and awaking financial markets, one may find this theory highly relevant. It is obviously one of the cases where social targets meat financial equilibrium and here they are in the same side. Specifically, it is argued that implementing the guarantee with an intra-generational, risk-sharing mechanism is the most efficient way to reduce the effect of this abnormality.Ishay WolfMDPI AGarticledefined contributionpay-as-you-goput optionsocial securityRisk in industry. Risk managementHD61FinanceHG1-9999ENJournal of Risk and Financial Management, Vol 14, Iss 525, p 525 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	defined contribution pay-as-you-go put option social security Risk in industry. Risk management HD61 Finance HG1-9999
spellingShingle	defined contribution pay-as-you-go put option social security Risk in industry. Risk management HD61 Finance HG1-9999 Ishay Wolf Political Stress and the Sustainability of Funded Pension Schemes: Introduction of a Financial Theory
description	This study introduces multiplayer game in the modern pension market. Particularly, this study claims that low earners and high earners have different interests when playing in funded pension market scheme. This differentiating is enabled by avoiding the entire society as a single earning cohort. This study using financial position, demonstrates a socio-economic anomaly in the funded pension system, which is in favor of high-earning cohorts at the expense of low-earning cohorts. This anomaly is realized by a lack of insurance and exposure to financial and systemic risks. Furthermore, the anomaly could lead to a pension re-reform back to an unfunded scheme system, due mostly to political pressure. This study found that a minimum pension guarantee is a rebalance mechanism for this anomaly, which increases the probability of a sustainable pension scheme. Nowadays when countries try to balance between social expenses and awaking financial markets, one may find this theory highly relevant. It is obviously one of the cases where social targets meat financial equilibrium and here they are in the same side. Specifically, it is argued that implementing the guarantee with an intra-generational, risk-sharing mechanism is the most efficient way to reduce the effect of this abnormality.
format	article
author	Ishay Wolf
author_facet	Ishay Wolf
author_sort	Ishay Wolf
title	Political Stress and the Sustainability of Funded Pension Schemes: Introduction of a Financial Theory
title_short	Political Stress and the Sustainability of Funded Pension Schemes: Introduction of a Financial Theory
title_full	Political Stress and the Sustainability of Funded Pension Schemes: Introduction of a Financial Theory
title_fullStr	Political Stress and the Sustainability of Funded Pension Schemes: Introduction of a Financial Theory
title_full_unstemmed	Political Stress and the Sustainability of Funded Pension Schemes: Introduction of a Financial Theory
title_sort	political stress and the sustainability of funded pension schemes: introduction of a financial theory
publisher	MDPI AG
publishDate	2021
url	https://doaj.org/article/badd61b280d6496aac23727860db5d9b
work_keys_str_mv	AT ishaywolf politicalstressandthesustainabilityoffundedpensionschemesintroductionofafinancialtheory
_version_	1718411581449043968

Political Stress and the Sustainability of Funded Pension Schemes: Introduction of a Financial Theory

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