Generational Accounting and Hungarian Pension Reform
The essence of generational accounting is to break down total net contributions in a given year to each cohort and to project this profile into the future. Using additional assumptions on the discount rate and the growth of productivity and population, the per capita net contribution of future generations can be determined, which satisfies the inter-temporal budget constraint. Generational accounts in the Hungarian pension system show that the 1997 reform package significantly reduced the financial tension generated by demographic and institutional factors.
Summary: | The essence of generational accounting
is to break down total net contributions in a given year to
each cohort and to project this profile into the future.
Using additional assumptions on the discount rate and the
growth of productivity and population, the per capita net
contribution of future generations can be determined, which
satisfies the inter-temporal budget constraint. Generational
accounts in the Hungarian pension system show that the 1997
reform package significantly reduced the financial tension
generated by demographic and institutional factors. |
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