In financial equilibrium, a pay-as-you-go pension system will offer yields (explicit or implicit) equal to the rate of growth of the incomes subject to the contribution levy or of reasonable proxies such as GDP. One virtue of the contribution-based award formula is that it makes this yield...

The paper identifies the sustainable rate of return (to be credited on all account balances) for a generic Defined-Contribution pension scheme regardless of its degree of funding.

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...