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.

This paper examines the possibility of embedding public long-term care (LTC) insurance within the retirement pension system, i.e. introducing life care annuities into a notional defined contribution framework. To do this, we develop a multistate overlapping generations model that includes the so-called survivor dividend and give special attention to the assumptions made about mortality rates for dependent persons and LTC incidence rates, which largely determine the contribution rate assigned to LTC. The proposed model could be of interest to policymakers because it could be implemented without too much difficulty, it would universalize LTC coverage with a “fixed” cost, and it would discourage politicians from making promises about future LTC benefits without the necessary funding support.

In this paper, we develop a theoretical basis for drawing up a “Swedish” type actuarial balance sheet for a defined benefit pay-as-you-go (DB PAYG) scheme with retirement and disability benefits. Our model enables us to obtain the system's expected average turnover duration, measure the scheme's solvency and explore the phenomenon identified as “pension reclassification”, a widespread practice that masks the system's real status unless further pension information becomes available. The model is clearly linked to actuarial practice in social security and gives partial support to the practical adaptation of Swedish methodology carried out by OSFI (2012) in applying the concept of the contribution asset to the Canadian Pension Plan (CPP) balance sheet, which includes disability and survivor benefits.

The aim of this paper is to make an assessment of the 2011 reform of the public pension system in Spain using the Swedish pension system as a benchmark, although some reference to the US pension system is also made. The paper focuses on the reform, explaining its aims, breaking down the main contents, critically examining the official view and describing the expected ageing of the Spanish population. This approach complements the quantitative analyses performed by other researchers and will enable us to assess the reformed system with the focus on four main areas: actuarial fairness, actuarial transparency, solvency and communication with the public. The main conclusion is that the reform was a wasted opportunity given that Spain did not take advantage of the lessons learned in Sweden, it did not include any elements for improving the management of pay-as-you-go systems, and there is no sound basis for claiming that the system's sustainability is assured in the medium term, the long term or even the short term. The new parametric reforms currently under consideration in Spain are targeted to correct some of the pension system's design faults that have been highlighted in this paper.

The aim of this paper is to explain the ‘annuities puzzle’ in greater depth by introducing the bequest motive. It will try to determine whether this motive really is a relevant feature influencing the demand for life annuities from married couples. With this aim in mind, we develop an optimization model of the utility provided by purchasing a life annuity with contingent survivor benefit or a joint survivor life annuity. Our model is based on that first put forward by Brown and Poterba (2000), to which we have added elements from other models, such as Friedman and Warshawsky's (1990) and Vidal and Lejárraga's (2004), which include the bequest motive. This will enable us to calculate the annuity equivalent wealth and the optimal percentage of wealth to annuitize in various contexts: the possibility of access to actuarially fair annuity markets, the inclusion of so-called market imperfections, and the assumption that couples already have part of their wealth in pre-existing life annuities. Numerical results are presented for the case of Spain. The bequest motive is found not to be a significant factor influencing the demand for annuities from couples. Indeed very few couples would be willing to purchase them once we take into account the combined effects of market imperfections, the possibility of pre-existing annuities and the bequest motive. These findings have repercussions for policy makers regulating defined contribution capitalization systems, which are complementary to defined benefit systems.