Can and Should a Pay-As-You-Go Pension System Mimic a Funded System?
This paper considers the possibility of letting a pay-go pension system mimic a fully funded pension system. Generically, it turns out to be impossible to make a less than fully funded pension system actuarially fair on average. But a non-funded pay-go pension system can provide an actuarially fair implicit return on the margin, which increases economic efficiency. The benefits of this fall entirely on current pensioners as a windfall gain unless compensating transfers are implemented. Such a system can be thought of as a pay-go system that mimics a fully funded pension system in combination with lump transfers to current pensioners from current and future workers.
|Date of creation:||04 Jun 1998|
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Feldstein, Martin, 1996.
"The Missing Piece in Policy Analysis: Social Security Reform,"
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- Hassler, John & Lindbeck, Assar, 1997. "Optimal Actuarial Fairness in Pension Systems - a Note," Seminar Papers 609, Stockholm University, Institute for International Economic Studies.
- Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467-467.
- Smith, Alasdair, 1982. "Intergenerational transfers as social insurance," Journal of Public Economics, Elsevier, vol. 19(1), pages 97-106, October. Full references (including those not matched with items on IDEAS)
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