Can and Should a Pay-As-You-Go Pension System Mimic a Funded System?
AbstractThis paper considers the possibility of letting a pay-go pension system mimic a fully funded pension system. Generically, it turns out to be impossible to make a less than fully funded pension system actuarially fair on average. But a non-funded pay-go pension system can provide an actuarially fair implicit return on the margin, which increases economic efficiency. The benefits of this fall entirely on current pensioners as a windfall gain unless compensating transfers are implemented. Such a system can be thought of as a pay-go system that mimics a fully funded pension system in combination with lump transfers to current pensioners from current and future workers.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 499.
Length: 18 pages
Date of creation: 04 Jun 1998
Date of revision:
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More information through EDIRC
Pension systems; Pay-as-you-go; Actuarial; Funding;
Find related papers by JEL classification:
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-1998-07-06 (All new papers)
- NEP-PBE-1998-07-06 (Public Economics)
- NEP-PUB-1998-07-06 (Public Finance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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609, Stockholm University, Institute for International Economic Studies.
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- Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467.
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