Toshihiro Ihori and Toshiaki Tachibanaki
A large number of advanced countries have problems with their social security systems, in particular public pension systems. One of the most important causes of this problem is that many countries face an ageing trend in age-population structure. The number of people who contribute financially to the system is decreasing. The problem is serious particularly when the system is either a pay-as you-go scheme or an unfunded scheme.
There are, of course, several other factors such as the decrease in the participation of men in the labour force, the slow increase in female participation, the policy of early retirement to offset youth unemployment, which cause serious problems in social security. In several industrialized countries the following can be added: the weak performance in the macroeconomy which reduces the amount of contributions, and the low rate of interest which lowers the rate of return on asset management.
There are several studies which show projections of the fiscal liabilities of public pensions programmes and serious financial deficits, and present incapabilities of paying a sufficient amount of pension benefits continuously, when the current pay-as-you-go or the unfunded scheme is kept below the ageing trend. See, for example, OECD (1996) and Disney (2000) for advanced countries, specifically the OECD countries. If we look at studies for particular individual countries, we should be looking at an extremely large field.
Many countries contemplate policy reforms to modify public pension systems in order that the government can sustain the system without reducing the benefit level drastically and/or increasing the contributions level considerably.
Several countries have contemplated such reforms, and other countries have already finished implementing them. This book intends to investigate reasons for introducing policy reform, and outcomes derived from its introduction. The method for investigating these issues is both theoretical and empirical.
'Theoretical' implies that an evaluation is made by theoretical papers