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Pension plans and retirement incentives

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Author Info

  • Disney, Richard
  • Whitehouse, Edward

Abstract

This paper aims to examine the impact of type of pension scheme on retirement behavior. Section 1 describes a simple, theoretical model of optimal retirement. Section 2 introduces an empirical model of a simple retirement savings plan, or defined contribution pension scheme. Section 3 compares this with a defined benefit scheme. Sections4 and 5 examine the effect of these pension plans on work incentives. The following three sections extend the basic model to introduce'real world'features of pension plans. Section 9 examines the policy implications of the results and sets out anagenda for future research in this area. The results show a powerful incentive to leave work at the earliest possible age in defined benefit plans. Defined contribution plans, in contrast, encourage people to remain in work longer.

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Bibliographic Info

Paper provided by The World Bank in its series Social Protection Discussion Papers with number 20851.

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Date of creation: 31 Aug 1999
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Handle: RePEc:wbk:hdnspu:20851

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Related research

Keywords: Wages; Compensation&Benefits; Youth and Governance; Economic Theory&Research; Environmental Economics&Policies; Pensions&Retirement Systems;

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References

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Citations

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Cited by:
  1. Ondrej Schneider, 2009. "Reforming Pensions in Europe: Economic Fundamentals and Political Factors," CESifo Working Paper Series 2572, CESifo Group Munich.
  2. Whitehouse, Edward, 2000. "Administrative charges for funded pensions: An international comparison and assessment," MPRA Paper 14172, University Library of Munich, Germany.
  3. Whitehouse, Edward & Queisser, Monika, 2007. "Pensions at a glance: public policies across OECD countries," MPRA Paper 16349, University Library of Munich, Germany.
  4. Castel, Paulette & Fox, Louise, 2001. "Gender dimensions of pension reform in the Former Soviet Union," Policy Research Working Paper Series 2546, The World Bank.
  5. Whitehouse, Edward, 2000. "Paying for pensions: An international comparison of administrative charges in funded retirement-income systems," MPRA Paper 14171, University Library of Munich, Germany.
  6. Disney, Richard & Whitehouse, Edward, 2001. "Cross-country comparisons of pensioners’ incomes," MPRA Paper 16345, University Library of Munich, Germany.
  7. Tryggvi Thor Herbertsson, 2001. "Shrinking Labour Forces and Early Retirement," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 2(4), pages 31-37, October.
  8. Whitehouse, Edward, 2001. "Pension systems in 15 countries compared: the value of entitlements," MPRA Paper 14751, University Library of Munich, Germany.
  9. Whitehouse, Edward, 2000. "How Poor are the Old? A Survey of Evidence from 44 Countries," MPRA Paper 14177, University Library of Munich, Germany.

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