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The Gains from Pension Reform

  • Lindbeck, Assar

    ()

    (Institute for International Economic Studies, Stockholm University)

  • Persson, Mats

    ()

    (Institute for International Economic Studies, Stockholm University)

We classify social security pension systems in three dimensions: actuarial versus non-actuarial, funded versus unfunded, and defined-benefit versus defined-contribution systems. Recent pension reforms are discussed in terms of these dimensions. Shifting to a more actuarial system reduces labor-market distortions, although limiting the scope for redistribution. Shifting to a funded system may increase saving, redistribute income to future generations and distort contemporary labor supply. A partial shift to a funded system helps individuals diversify their pension assets. A shift from a defined-benefit to a defined-contribution system means that income risk will be shifted from workers to pensioners.

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Paper provided by Stockholm University, Institute for International Economic Studies in its series Seminar Papers with number 712.

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Length: 68 pages
Date of creation: 16 May 2002
Date of revision:
Handle: RePEc:hhs:iiessp:0712
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