The Gains from Pension Reform
AbstractWe characterize pension systems along three dimensions: 1) actuarial vs. non-actuarial, 2) funded vs. pay-as-you-go, 3) defined-contribution vs. defined-benefit. Increasing the degree of actuarial fairness, by strengthening the linkage between contributions and benefits, reduces labor market distortions and may increase welfare in a Pareto-efficiency sense. Increasing the degree of funding implies mainly a redistribution of income among generations, although a partial shift to funding also provides better risk-return combinations for individuals. Shifting from defined-benefit to defined-contribution schemes (with fixed contribution rates) shifts the income risk from workers and taxpayers to pensioners.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 580.
Length: 65 pages
Date of creation: 27 May 2002
Date of revision:
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Social security; Funding;
Other versions of this item:
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-06-13 (All new papers)
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- Andrew B. Abel, .
"The Effects of Investing Social Security Funds in the Stock Market When Fixed Costs Prevent Some Households from Holding Stocks,"
Rodney L. White Center for Financial Research Working Papers
09-00, Wharton School Rodney L. White Center for Financial Research.
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- Andrew B. Abel, . "The Effects of Investing Social Security Funds in the Stock Market When Fixed Costs Prevent Some Households from Holding Stocks," Rodney L. White Center for Financial Research Working Papers 9-00, Wharton School Rodney L. White Center for Financial Research.
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