Automatic Balance Mechanisms for Notional Defined Contribution pension systems guaranteeing social adequacy and financial sustainability: an application to the Italian pension system
Since the mid 1990s some European countries (including Italy) implemented a Notional
Defined Contribution (NDC) pension system. Such a system is based on pay-as-you-go
funding, while the pension amount is a function of the individual lifelong contribution.
Despite many appealing features, the NDC system presents some drawbacks: first, it is
vulnerable to demographic and economic shocks compromising the financial sustainability;
second, it could fail to guarantee adequate pension benefits to pensioners. In order to reduce