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Partial De-Annuitization of Public Pensions v.s. Retirement Age Differentiation. Which is Best to Account for Longevity Differences?

Author

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  • Vincent Vandenberghe

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

Extensive research by demographers and economists has shown that longevity differs across socioeconomic status (SES), with low-educated or low-income people living, on average, shorter lives than their better-endowed and wealthier peers. Therefore, a pension system with a unique retirement age is a priori problematic. The usual policy recommendation to address this problem is to differentiate the retirement age by SES. This paper explores the relative merits of partial de-annuitization of public pensions as a way of addressing the (imperfectly assessed) inequality of longevity.

Suggested Citation

  • Vincent Vandenberghe, 2021. "Partial De-Annuitization of Public Pensions v.s. Retirement Age Differentiation. Which is Best to Account for Longevity Differences?," LIDAM Discussion Papers IRES 2021029, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2021029
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    References listed on IDEAS

    as
    1. Marc Fleurbaey & Marie‐Louise Leroux & Pierre Pestieau & Gregory Ponthiere, 2016. "Fair Retirement Under Risky Lifetime," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57(1), pages 177-210, February.
    2. Ayuso, Mercedes & Bravo, Jorge Miguel & Holzmann, Robert, 2016. "Addressing Longevity Heterogeneity in Pension Scheme Design and Reform," IZA Discussion Papers 10378, Institute of Labor Economics (IZA).
    3. Antoine Bommier & Marie-Louise Leroux & Jean-Marie Lozachmeur, 2011. "Differential mortality and social security," Canadian Journal of Economics, Canadian Economics Association, vol. 44(1), pages 273-289, February.
    4. Gregory Ponthiere, 2020. "A theory of reverse retirement," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1618-1659, September.
    5. Leroux, Marie-Louise & Pestieau, Pierre & Ponthière, Grégory, 2015. "Longévité différentielle et redistribution : enjeux théoriques et empiriques," L'Actualité Economique, Société Canadienne de Science Economique, vol. 91(4), pages 465-497, Décembre.
    6. Sanchez-Romero, Miguel & Lee, Ronald D. & Prskawetz, Alexia, 2020. "Redistributive effects of different pension systems when longevity varies by socioeconomic status," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    7. Palmer, Edward, 2000. "The Swedish pension reform model : framework and issues," Social Protection Discussion Papers and Notes 23086, The World Bank.
    8. Baurin, Arno, 2021. "The limited power of socioeconomic status to predict lifespan: Implications for pension policy," The Journal of the Economics of Ageing, Elsevier, vol. 20(C).
    9. Cormac O'Dea & David Sturrock, 2019. "Survival pessimism and the demand for annuities," IFS Working Papers W19/02, Institute for Fiscal Studies.
    10. Marie-Louise Leroux & Pierre Pestieau & Grégory Ponthière, 2015. "Longévité différentielle et redistribution : enjeux théoriques et empiriques," CIRANO Working Papers 2015s-06, CIRANO.
    11. Marc Fleurbaey & Marie‐Louise Leroux & Pierre Pestieau & Gregory Ponthiere, 2016. "Fair Retirement Under Risky Lifetime," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57, pages 177-210, February.
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    More about this item

    Keywords

    Pension Policy; Longevity Difference; Equity; Annuitization; Retirement Age Differentiation;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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