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Flexible pension take-up in social security

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  • Yvonne Adema
  • Jan Bonenkamp
  • Lex Meijdam

Abstract

This paper studies the redistribution and welfare effects of increasing the flexibility of individual pension take-up. We use an overlapping-generations model with Beveridgean pay-as-you-go pensions and heterogeneous individuals who differ in ability and lifespan. We find that introducing flexible pension take-up can induce a Pareto improvement when the initial pension scheme contains within-cohort redistribution and induces early retirement. Such a Pareto improving reform entails the application of uniform actuarial adjustment of pension entitlements based on average lifespan. Introducing actuarial non-neutrality that stimulates later retirement further improves such a flexibility reform. Copyright The Author(s) 2016

Suggested Citation

  • Yvonne Adema & Jan Bonenkamp & Lex Meijdam, 2016. "Flexible pension take-up in social security," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(2), pages 316-342, April.
    • Handle: RePEc:kap:itaxpf:v:23:y:2016:i:2:p:316-342
    DOI: 10.1007/s10797-015-9354-3
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    1. Pashchenko, Svetlana & Porapakkarm, Ponpoje & Jang, Youngsoo, 2023. "Mortality Regressivity and Pension Design," MPRA Paper 117936, University Library of Munich, Germany.
    2. Komura, Mizuki & Ogawa, Hikaru, 2014. "Pension and the Family," IZA Discussion Papers 8479, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Redistribution; Welfare; Retirement; Flexible pensions; Actuarial adjustment; D61; H23; H55; J26;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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