The added value of sharing risk with future generations

A Netspar working group recently studied the profitability of inter-generational risk sharing. Risks are shared with future generations in the sense that future participants are partially exposed to current financial benefits and pitfalls. This form of risk sharing can have a certain added economic value, in that risks can be distributed across a greater number of age cohorts so that each particular age cohort bears a smaller share of the overall risk. The disadvantage of risk sharing between current and future participants is that it can be associated with administrative risks and discontinuity risks.

This report takes a closer look at the estimates from various underlying studies of the trade-off between the prosperity benefits of inter-generational risk sharing and the attendant discontinuity risks.

Netspar is publishing a report, including a summary, and six associated papers on this important issue. The collective report can be found here (only available in Dutch).

Reading tips

In addition, the following underlying papers, referenced to in the report, are also made accessible (in alphabetical order):

 

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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