Differentiating Indexation in Dutch Pension Funds

This discussion paper led to a publication in <A href="http://www.springerlink.com/index/J107501580204223.pdf">'De Economist'</A>, 159(3), 323-360.<p>We investigate numerically how indexation of funded pensions for inflation can be differ-entiated across the various groups of fund participants. The pension arrangement is modelledafter the Dutch situation. While the aggregate welfare consequences are small, group-specific consequences are more substantial with the workers and future born losing and retirees bene-fitting from a shift away from uniform indexation. Those welfare shifts result from systematicredistribution of welfare rather than shifts in the benefit of risk sharing provided by the system.