Financing Disability Benefits In A System Of Individual Accounts: Lessons From International Experience
In recent years, many countries with mandatory defined benefit pay-as-you-go (“PAYG”) systems have modified their systems to include individual accounts for financing retirement pensions. In most of these countries, a portion of the mandatory pension system’s contribution rate has been “carved-out”, and contributions earmarked by the carve-out are channeled into retirement accounts. Upon reaching retirement age, the contributions and accumulated interest in an individual’s account are used to finance all or part of that individual’s total retirement pension. Although an individual account may be a useful vehicle for financing retirement income, it may not prove sufficient for financing disability benefits. In a pension system that depends solely or partly on individual investment accounts, individuals who become disabled at a young age might lack sufficient capital in their individual accounts to finance adequate disability pensions. Generally, therefore, the implementation of “carve out” accounts for financing retirement benefits will necessitate changes to the financing mechanism for disability benefits. A wide range of policy options exists for adapting disability benefits to operate in a pension system with carve-out retirement accounts. The purpose of this paper is to examine how countries with carve-out individual retirement accounts have approached disability reform, and to assess the applicability of these approaches in the United States.
|Date of creation:||12 Jun 2006|
|Contact details of provider:|| Postal: Hovey House, 140 Commonwealth Avenue, Chestnut Hill, MA 02467|
Phone: (617) 552-1762
Fax: (617) 552-0191
Web page: http://crr.bc.edu/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:crr:crrwps:wp2006-4. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Amy Grzybowski)or (Christopher F Baum)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.