IDEAS home Printed from https://ideas.repec.org/p/cpb/discus/254.html
   My bibliography  Save this paper

Flexible pension take-up in social security

Author

Listed:
  • Jan Bonenkamp
  • Yvonne Adema
  • 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, where individuals differ in ability and life span. 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 life expectancy. Introducing actuarial non-neutrality that stimulates later retirement further improves such a flexibility reform.

Suggested Citation

  • Jan Bonenkamp & Yvonne Adema & Lex Meijdam, 2013. "Flexible pension take-up in social security," CPB Discussion Paper 254, CPB Netherlands Bureau for Economic Policy Analysis.
    • Handle: RePEc:cpb:discus:254
    as

    Download full text from publisher

    File URL: https://www.cpb.nl/sites/default/files/publicaties/download/cpb-discussion-paper-254-flexible-pension-take-social-security.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Eric French, 2005. "The Effects of Health, Wealth, and Wages on Labour Supply and Retirement Behaviour," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(2), pages 395-427.
    2. Helmuth Cremer & Jean‐Marie Lozachmeur & Pierre Pestieau, 2010. "Collective Annuities and Redistribution," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(1), pages 23-41, February.
    3. Cremer, Helmuth & Pestieau, Pierre, 2003. "The Double Dividend of Postponing Retirement," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(4), pages 419-434, August.
    4. Georges Casamatta & Helmuth Cremer & Pierre Pestieau, 2005. "Voting on Pensions with Endogenous Retirement Age," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(1), pages 7-28, January.
    5. Christian Jaag & Christian Keuschnigg & Mirela Keuschnigg, 2010. "Pension reform, retirement, and life-cycle unemployment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(5), pages 556-585, October.
    6. Rainald Borck, 2007. "On the Choice of Public Pensions when Income and Life Expectancy Are Correlated," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(4), pages 711-725, August.
    7. Krueger, Alan B & Pischke, Jorn-Steffen, 1992. "The Effect of Social Security on Labor Supply: A Cohort Analysis of the Notch Generation," Journal of Labor Economics, University of Chicago Press, vol. 10(4), pages 412-437, October.
    8. Walter Fisher & Christian Keuschnigg, 2010. "Pension reform and labor market incentives," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(2), pages 769-803, March.
    9. 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.
    10. Monika Queisser & Edward Whitehouse, 2006. "Neutral or Fair?: Actuarial Concepts and Pension-System Design," OECD Social, Employment and Migration Working Papers 40, OECD Publishing.
    11. Christophe Hachon, 2008. "Redistribution, Pension Systems and Capital Accumulation," Working Papers halshs-00279167, HAL.
    12. Axel Borsch‐Supan & Anette Reil‐Held, 2001. "How Much is Transfer and How Much is Insurance in a Pay‐as‐you‐go System? The German Case," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(3), pages 505-524, September.
    13. Bodie, Zvi & Merton, Robert C. & Samuelson, William F., 1992. "Labor supply flexibility and portfolio choice in a life cycle model," Journal of Economic Dynamics and Control, Elsevier, vol. 16(3-4), pages 427-449.
    14. repec:bla:scandj:v:103:y:2001:i:3:p:505-24 is not listed on IDEAS
    15. Jan Bonenkamp, 2009. "Measuring Lifetime Redistribution in Dutch Occupational Pensions," De Economist, Springer, vol. 157(1), pages 49-77, March.
    16. Svend E. Hougaard Jensen & Morten I. Lau & Panu Poutvaara, 2004. "Efficiency and Equity Aspects of Alternative Social Security Rules," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 60(3), pages 325-358, September.
    17. Christophe Hachon, 2008. "Redistribution, Pension Systems and Capital Accumulation," Financial Theory and Practice, Institute of Public Finance, vol. 32(3), pages 339-368.
    18. Peter Adams & Michael D. Hurd & Daniel L. McFadden & Angela Merrill & Tiago Ribeiro, 2004. "Healthy, Wealthy, and Wise? Tests for Direct Causal Paths between Health and Socioeconomic Status," NBER Chapters, in: Perspectives on the Economics of Aging, pages 415-526, National Bureau of Economic Research, Inc.
    19. Galasso, Vincenzo & Profeta, Paola, 2002. "The political economy of social security: a survey," European Journal of Political Economy, Elsevier, vol. 18(1), pages 1-29, March.
    20. Razin, Assaf & Sadka, Efraim, 1999. "Migration and pension with international capital mobility," Journal of Public Economics, Elsevier, vol. 74(1), pages 141-150, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    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).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. J. Ignacio Conde-Ruiz & Vincenzo Galasso & Paola Profeta, "undated". "The Evolution of Retirement," Working Papers 2005-03, FEDEA.
    3. Tim Krieger & Thomas Lange, 2012. "Education, Life Expectancy and Pension Reform," Hacienda Pública Española / Review of Public Economics, IEF, vol. 202(3), pages 31-55, September.
    4. Helmuth Cremer & Jean‐Marie Lozachmeur & Pierre Pestieau, 2008. "Social Security And Retirement Decision: A Positive And Normative Approach," Journal of Economic Surveys, Wiley Blackwell, vol. 22(2), pages 213-233, April.
    5. J. Ignacio Conde-Ruiz & Vincenzo Galasso & Paola Profeta, 2005. "Early Retirement and Social Security: A Long Term Perspective," CESifo Working Paper Series 1571, CESifo.
    6. Adema, Y. & Bonenkamp, J. & Meijdam, A.C., 2011. "Retirement Flexibility and Portfolio Choice," Discussion Paper 2011-077, Tilburg University, Center for Economic Research.
    7. Daniel Vuuren, 2014. "Flexible Retirement," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 573-593, July.
    8. Christian Keuschnigg & Mirela Keuschnigg & Christian Jaag, 2011. "Aging and the Financing of Social Security in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 147(II), pages 181-231, June.
    9. Ryo Arawatari & Tetsuo Ono, 2011. "Old-age Social Security vs. Forward Intergenerational Public Goods Provision," Discussion Papers in Economics and Business 11-26-Rev, Osaka University, Graduate School of Economics, revised Apr 2012.
    10. Mauro Visaggio, 2019. "Extending the retirement age for preserving the costitutive pension system mission," Public Finance Research Papers 40, Istituto di Economia e Finanza, DSGE, Sapienza University of Rome.
    11. Juan Lacomba & Francisco Lagos, 2010. "Postponing the legal retirement age," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 1(3), pages 357-369, July.
    12. Julien Hugonnier & Florian Pelgrin, 2013. "Health and (Other) Asset Holdings," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(2), pages 663-710.
    13. Börsch-Supan, Axel & Härtl, Klaus & Leite, Duarte Nuno & Ludwig, Alexander, 2018. "Endogenous Retirement Behavior of Heterogeneous Households Under Pension Reforms," MEA discussion paper series 201804, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    14. Keuschnigg, Christian, 2016. "Aging, Taxes and Pensions in Switzerland," Economics Working Paper Series 1601, University of St. Gallen, School of Economics and Political Science.
    15. Marie‐Louise Leroux, 2010. "The Political Economy of Social Security under Differential Longevity and Voluntary Retirement," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(1), pages 151-170, February.
    16. Helmuth Cremer & Philippe Donder, 2016. "Life Expectancy Heterogeneity and the Political Support for Collective Annuities," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(3), pages 594-615, July.
    17. Christian Jaag & Christian Keuschnigg & Mirela Keuschnigg, 2010. "Pension reform, retirement, and life-cycle unemployment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(5), pages 556-585, October.
    18. Yvonne Adema & Jan Bonenkamp & Lex Meijdam, 2011. "Retirement Flexibility and Portfolio Choice in General Equilibrium," Tinbergen Institute Discussion Papers 11-038/2/DSF13, Tinbergen Institute.
    19. Georges Casamatta & L. Batté, 2016. "The Political Economy of Population Aging," Post-Print hal-02520521, HAL.
    20. Marko Koethenbuerger & Panu Poutvaara & Paola Profeta, 2008. "Why are more redistributive social security systems smaller? A median voter approach," Oxford Economic Papers, Oxford University Press, vol. 60(2), pages 275-292, April.

    More about this item

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpb:discus:254. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/cpbgvnl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.