Age Specific Multi-Stage OLG Model for PAYG Pension Schemes

초록

This study proposes an age-specific multi-stage overlapping generation (OLG) model that disaggregates workers and retirees by age to capture life-cycle dynamics. By incorporating age-specific productivity and transition probabilities, we examine economic variables such as capital accumulation, consumption, and tax burdens under Defined Benefit (DB) and Notional Defined Contribution (NDC) pension schemes within a pay-as-you-go basis. The analysis of the various scenarios shows that DB schemes exhibit higher consumption but lower savings and capital accumulation compared to NDC schemes, supporting precautionary motive for savings. Delaying retirement age reduces tax burdens under DB schemes but increases them under NDC schemes, highlighting trade-offs in policy design. Lastly, DB schemes are more vulnerable to longevity risks and reduce retirees' consumption to a greater extent, while NDC schemes mitigate these effects through the annuity factor.

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