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Funded pension schemes: Economic effects and policy implications


  • Grech, Aaron George


This paper reviews alternative pension systems and examines the arguments in favour of funded pension schemes. The benefits of the latter derive mainly from long-term economic efficiency gains rather than from the immediate relief of pressures on the fiscal balance. Indeed, the transition towards a funded scheme could imply an increase in government expenditure in the short run. Fiscal consolidation and the attainment of equilibrium in the external balance are essential prerequisites for a move towards a funded pension system to be conducted successfully.

Suggested Citation

  • Grech, Aaron George, 1999. "Funded pension schemes: Economic effects and policy implications," MPRA Paper 33615, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:33615

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    References listed on IDEAS

    1. Mitchell, Olivia S & Zeldes, Stephen P, 1996. "Social Security Privatization: A Structure for Analysis," American Economic Review, American Economic Association, vol. 86(2), pages 363-367, May.
    2. Peter S. Heller, 1998. "Rethinking Public Pension Reform Initiatives," IMF Working Papers 98/61, International Monetary Fund.
    3. Reisen, Helmut, 1997. "Liberalizing foreign investments by pension funds: Positive and normative aspects," World Development, Elsevier, vol. 25(7), pages 1173-1182, July.
    4. Helmut Reisen & John Williamson, 1994. "Pension Funds, Capital Controls and Macroeconomic Stability," OECD Development Centre Working Papers 98, OECD Publishing.
    5. William A. Halter & Richard Hemming, 1987. "The Impact of Demographic Change on Social Security Financing," IMF Staff Papers, Palgrave Macmillan, vol. 34(3), pages 471-502, September.
    6. Robert Holzmann, 1997. "Pension Reform, Financial Market Development, and Economic Growth: Preliminary Evidence from Chile," IMF Staff Papers, Palgrave Macmillan, vol. 44(2), pages 149-178, June.
    7. Alfredo Cuevas & George A Mackenzie & Philip R. Gerson, 1997. "Pension Regimes and Saving," IMF Occasional Papers 153, International Monetary Fund.
    8. Corsetti, Giancarlo & Schmidt-Hebbel, Klaus, 1995. "Pension reform and growth," Policy Research Working Paper Series 1471, The World Bank.
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    Cited by:

    1. Grech, Aaron George, 2000. "The private and public savings gaps in Malta and their impact on the current account," MPRA Paper 33208, University Library of Munich, Germany.

    More about this item


    pension reform; funded pension systems; economics of ageing;

    JEL classification:

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


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