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Pension design and general public finances: beyond baseline actuarial neutrality

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  • Blanchet, Didier
  • Cette, Gilbert

Abstract

The design of pension benefits cannot be considered in disconnection from the constraints related to the general public finances. A change in the average retirement age has an impact not only on pension funding, but also on resources available for other public spending. Incorporating this externality implies penalties/bonuses for earlier/later retirement that are much higher than those designed to balance the pension system alone.

Suggested Citation

  • Blanchet, Didier & Cette, Gilbert, 2025. "Pension design and general public finances: beyond baseline actuarial neutrality," Economics Letters, Elsevier, vol. 257(C).
    • Handle: RePEc:eee:ecolet:v:257:y:2025:i:c:s0165176525005208
    DOI: 10.1016/j.econlet.2025.112683
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    References listed on IDEAS

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    1. Jonas Kolsrud & Camille Landais & Daniel Reck & Johannes Spinnewijn, 2024. "Retirement Consumption and Pension Design," American Economic Review, American Economic Association, vol. 114(1), pages 89-133, January.
    2. Monika Queisser & Edward Whitehouse, 2006. "Neutral or Fair?: Actuarial Concepts and Pension-System Design," OECD Social, Employment and Migration Working Papers 40, OECD Publishing.
    3. Diamond, P. A. & Mirrlees, J. A., 1978. "A model of social insurance with variable retirement," Journal of Public Economics, Elsevier, vol. 10(3), pages 295-336, December.
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    More about this item

    Keywords

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    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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