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Probabilistic Approach to Government Employee Pension System
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 Title & Authors
Probabilistic Approach to Government Employee Pension System
Kim, Joo-Yoo; Song, Seong-Joo;
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This article examines the financial soundness of the government employee pension system(GEPS). We use a model that simplifies the existing GEPS considering survival probability distribution of the life of employees. Two approaches were selected for the research: One is the expected net value of pension for an individual employee and the other is the default probability of the system from Monte-carlo simulation. The outcome reveals following three possibilities. First of all, the individual expected net value presents unfairness between the retiree's premium and the benefit he/she receives. Secondly, the Monte-carlo simulation suggests that the default is highly likely to happen in less than 30 years. Thirdly, the governmental reserve and subsidy for GEPS should be required to a certain degree in order to alleviate the probability of default less than 5 percent for the next 30 years.
Government employee pension system;expected net value;Monte carlo simulation;default probability;
 Cited by
공무원 연금재정의 파산확률과 임금피크제,장철원;송성주;

Journal of the Korean Data Analysis Society, 2015. vol.17. 2B, pp.687-695
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