By Maria Chaykina

Notional Defined Contribution (NDC) pension schemes convert accumulated pension wealth into an annuity, based on an average life expectancy at retirement. When longevity differs across social groups, a single conversion factor implies systematic transfers from shorter-lived to longer-lived individuals. This motivates proposals to differentiate benefits by socio-demographic characteristics related to life expectancy. We study whether such differentiation is perceived as fair using a survey experiment involving 3,004 Italian residents aged 18-66. Respondents completed an incentivised allocation task used to elicit their fairness views and then evaluated six reform scenarios that adjust pension benefits based on gender, region, income, household wealth, workplace fatigue, and health status. The results show that the fatigue-based and wealth-based scenarios receive the highest support, whereas the gender-based and region-based scenarios are strongly opposed. Self-interest predicts approval, with higher support among those who stand to gain from a reform. Respondents with libertarian views are consistently less supportive of changes in benefits, while egalitarians and, to a lesser extent, liberal egalitarians are more favourable. Our results inform policymakers on the importance of citizens’ fairness perceptions for the implementation and communication of financially sustainable pension reforms.

Source SSRN