Pensions across generations: scenarios for the Maltese Islands

This paper tests whether in a PAYG system there is an inter-generational balance between the contributions made during the working-career and the pension benefit received in retirement; covering different cohorts. The analysis takes Malta as a case study. Though the dependency ratio is comparatively low, the population is rapidly ageing. The results show that there is a generational imbalance with the young cohort unlikely to be any better off than those who have already retired. This however is sensitive to the assumed discount rate and the ‘no policy’ change scenario. The results also show that future generations may be net-gainers assuming a sustained level of wage growth. If, on the other hand, wage growth slows, the younger generation may become increasingly reliant on the bequests of older generations. This would explain why pressure has increased to regularly adjust the existing PAYG system as well to introduce other forms of pension schemes.

A Set of Generational Accounts for Australia: Base Year 1994/95

The baseline Australian generational accounts for 1994/95 presented in this paper reveal a moderate imbalance in favour of current generations, and thus a reversal of the imbalance evident in the 1990/91 base year accounts (Ablett, 1996a). However, alternative simulations suggest the fiscal constraint implied by recent official government projections should be sufficient to correct the generational imbalance of the baseline accounts. Generational accounting results involving several migration scenarios are also presented. These lend support to the view that migration has an overall net positive effect on government finances.