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An NDC approach to helping pensioners cope with the cost of long-term care

  • CARLOS VIDAL-MELIA (a1), MANUEL VENTURA-MARCO (a2) and JAVIER PLA-PORCEL (a3)
Abstract

This paper explores a notional defined contribution (NDC) approach aimed at helping pensioners to cope with the cost of long-term care (LTC). It develops the necessary technicalities to fully integrate an LTC benefit, graded according to the annuitant's degree of disability, into a generic NDC retirement framework with a minimum pension benefit for both contingencies. It also discusses the policy implications of various issues that should be taken into account before any decision is made to put the model into practice. Finally, to enable policymakers to better understand how the proposal would function, the paper includes a realistic numerical example.

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Manuel Ventura-Marco and Carlos Vidal-Meliá are grateful for the financial assistance received from the Spanish Ministry of the Economy and Competitiveness (Ministerio de Economía y Competitividad) project ECO2015-65826-P. We would also like to thank seminar participants at the Universities of Lyon, Barcelona and Complutense of Madrid, Peter Hall for his help with the English text and Juan Manuel Pérez-Salamero González for his help in obtaining data for performing the numerical example. The comments and suggestions made by Professor Alain Jousten and two anonymous referees were very helpful in improving the current version. Any errors are entirely our own.

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Journal of Pension Economics & Finance
  • ISSN: 1474-7472
  • EISSN: 1475-3022
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