Sergio Nisticò

Theoretical Foundations of Pay-as-You-Go Defined-Contribution Pension Schemes

The paper inquires into notional defined contribution pension schemes, which retain the pay-as-you-go financing method while adopting the award and indexation formulas typical of funded, defined-contribution systems. It examines the properties of the new arrangement and compares them with those of the traditional defined-benefit pay-as-you-go schemes.

Notional Defined Contribution (NDC) Pension Schemes and Income Patterns

During the 1990s, some important European countries, particularly Italy and Sweden, have radically transformed their public pension system by adopting defined-contribution rules while retaining a pay-as-you-go financial architecture. This paper inquires into the theoretical properties of these Notional Defined Contribution pension schemes in order to identify the determinants of the replacement rates awarded to individuals with different income patterns. Three typical career patterns are taken into consideration, according to whether the individual wage growth is equal to, higher than, or lower than average wage growth. The impact of, and the possible remedies to, a possible discontinuity on the replacement rates is finally discussed by means of a sensitivity analysis of the replacement rates with respect to the career length (for a given retirement age), the retirement age, and the conventional rate of return credited on all individual accounts.

Prices and Distributive Antagonism in the Work of Smith and Kalecki

Adam Smiths adding up theory (Sraffa 1951, p. xxxv) has generally been interpreted as an expression of the harmonious view of the mechanisms governing exchange ratios and distribution In two preceding works (Nistico 1988,1991) I tried to show that Smiths theory of prices is instead fully compatible with the classical approach to the theory of value and distribution based on the essential role played by class antagonism in a capitalist system.

Some notes on the redistribution inherent in the US public pension system

This paper shows that the U.S. Old†Age Insurance (OAI) does not eliminate all the regressive redistribution characterizing earnings†related schemes. The benchmark against which OAI is tested is the one†to†one contribution†benefit rule of the Notional Defined Contribution (NDC) scheme. The paper suggests that by redesigning OAI according to the NDC scheme workers would perceive the higher contributions needed to finance current obligations not as a tax but as an increase in mandatory savings rewarded with the pay†as†you†go interest rate and a stream of pension annuities more generous than that it would be possible to pay at the current contribution rate. (JEL H55, J26)

Sraffa 1926 and Sraffa 1960: An Attempt to Bridge the Gap

In 1926, the young Sraffa seemed ready to engage in a research program on imperfect competition: Almost any producer …, if he could rely upon the market in which he sells his products being prepared to take any quantity of them from him at the current price, without any trouble on his part except that of producing them, would extend his business enormously … The chief obstacle against which they have to contend when they want gradually to increase their production does not lie in the cost of production — which, indeed generally favours them in that direction — but in the difficulty of selling the larger quantity of goods without reducing the price, or without having to face increased marketing expenses (Sraffa 1926, p. 543)

Reflections on Sraffa's Legacy in Economics: A review essay

Abstract This paper reviews Heinz D. Kurzs edited collection of Critical Essays on Piero Sraffas Legacy in Economics. Besides providing an evaluation of the various contributions to the volume, the paper discusses some broad issues such as the notion of ‘price’ emerging from Sraffas Production of Commodities, the role of demand in Sraffas theory, the classical approach to political economy, the Hayek–Keynes–Sraffa debate and the capital controversy.

The Notional Defined Contribution Pension Scheme and the German ‘Point System’: A Comparison

Abstract This paper examines the analytical properties of the German ‘points-based’ pension system. These properties are compared with those of a canonical Notional Defined Contribution (NDC) pension scheme. The paper identifies the circumstances under which the German ‘points-based’ system would mimic a Swedish-type NDC scheme and verifies to what extent the German ‘points-based’ scheme ensures uniformity of individual rates of return for some hypothetical careers. Finally, the paper proposes a set of new possible adjustment rules able to increase similarity between the German point system and the NDC scheme.

Does the NDC scheme mimic the French point system

ABSTRACT After the implementation of the notional defined contribution (NDC) pension scheme in Italy and Sweden in the ‘90s, some authors argued that its design merely replicates the functioning of the points-based pension schemes already in place in France and Germany. The aim of this article is to assess the soundness of this proposition by comparing the properties of the French points-based pension system (FPS) with those of the NDC scheme, which refrains from intra-cohort redistributions by ensuring substantial uniformity of individual rates of return. In order to assess to what extent the FPS also avoids intra-cohort redistributions, we run several simulations for different career patterns. The results of the simulations show that the discretionary adjustments embedded in the FPS are responsible for random, regressive redistributions. Finally, the article identifies the theoretical ‘equivalence condition’ showing that full correspondence between the two schemes would require replacing the discretionary mechanisms of the FPS with an automatic adjustment of point values.

Financing Pay-as-you-go Public Pension Systems: Some Notes in the Light of the Classical-type Theory of Income Distribution

The paper uses a Sraffa-type two-sector model to study how the presence of retired workers interacts with the distribution of the surplus between workers and capitalists (firms). In particular, the paper investigates how the ongoing diminution of the ratio between active and retired workers affects the wage-profits-pensions frontier, which is defined after allowing that a social security tax, which reduces the claims of active workers and capitalists on the surplus of the economy, finances the pensions distributed each year to retired workers. Finally, it is argued that the different impact of defined-benefit and defined-contribution pay-as-you-go pension schemes depends on the actual incidence of payroll taxes.