Public Investment Funds and Value-Based Generational Accounting

We demonstrate how the methodology of value-based generational accounting reveals the position of various generations for any institutional arrangement sharing revenues and losses with current and future generations. The illustration in this section is based on a stand-alone pension fund with intergenerational risk sharing, but can also be applied to sovereign wealth funds and public nance. Changes in the stylized pension contract may easily lead to sizeable intergenerational value transfers as the allocation of risk amongst stakeholders changes substantially. We evaluate three types of policy reforms that are closely related to pension reforms in the past and current debate about pension reform: improvement of solvency risk management, the effect of a more conservative investment mix due to an ageing society, and challenges of life cycle theory