Is possible to stablish the Swedish nocional defined contribution accounts in order to define the Spanish retirement pensions?

Effects on the initial amount of retirement pension based on Notional Defined Contribution Accounts

Abstract

The aim of this paper is to measure the effect of a reform of the current public retirement pension system of Social Security, from a Defined Benefic system to a system based on Notional Defined Contribution Accounts that, although it remains a Pay-As-You-Go system, is based on defined contribution, following the example of the reform established in Sweden more than a decade ago.

This work shows that the Notional Defined Contribution Accounts has clear advantages in relation to proportionality and correspondence between contributions and pension benefits, but, unfortunately, it supposes an important reduction in the initial amount of retirement pension that will be received by the future pensioners of the Social Security system. The paper shows the need of additional financing sources, for example additional taxes, if the public system would have to ensure the adequacy of retirement pensions and not only the viability and sustainability of the system. At the same time, the study shows that it is necessary that citizens have enough information about what it would mean a structural pension reform of the retirement pension system that is working in our country currently.