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Forced reduction of pension contribution rate?

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  • Andras Simonovits

    (Institute of Economics Centre for Economic and Regional Studies, Hungarian Academy of Sciences also Mathematical Institute of Budapest University of Technology)

Abstract

Due to various causes, the pension contribution rate can be reduced temporarily below its long-term value. We call a reduction forced if the balance of the public pension system is preserved through excessive wage-hikes and irritable relative devaluation of pensions in progress. A very simple overlapping cohorts model shows the limits of this policy and the resulting unfairness among cohorts.

Suggested Citation

  • Andras Simonovits, 2018. "Forced reduction of pension contribution rate?," CERS-IE WORKING PAPERS 1811, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:1811
    as

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    References listed on IDEAS

    as
    1. Feldstein, Martin, 1996. "The Missing Piece in Policy Analysis: Social Security Reform," American Economic Review, American Economic Association, vol. 86(2), pages 1-14, May.
    2. András Simonovits, 2018. "Simple Models of Income Redistribution," Springer Books, Springer, number 978-3-319-72502-4, November.
    3. András Simonovits, 2003. "Modeling Pension Systems," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-59769-3, December.
    4. András Simonovits, 2003. "Modeling Pension Systems," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-4039-3845-9, December.
    5. Knell, Markus, 2018. "Increasing life expectancy and NDC pension systems," Journal of Pension Economics and Finance, Cambridge University Press, vol. 17(2), pages 170-199, April.
    6. Barr, Nicholas & Diamond, Peter, 2008. "Reforming Pensions: Principles and Policy Choices," OUP Catalogue, Oxford University Press, number 9780195311303, Decembrie.
    7. Peter A. Diamond & Peter R. Orszag, 2005. "Saving Social Security," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 11-32, Spring.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    public pensions; pension contribution rate; indexation; fairness among cohorts;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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