Fully Funded Social Security Pensions, Lifetime Risk and Income

Jochen Laps

VfS Annual Conference 2016 (Augsburg): Demographic Change from Verein für Socialpolitik / German Economic Association

Abstract: The paper analyzes the welfare consequences of insuring mortality risk by means of standard, fully funded Social Security pensions when individuals wish to make transfers to their heirs. In the presence of uninsured mortality risk, within-family transfers depend on realized lifespan. While Social Security crowds out private transfers, it provides transfer insurance and insurance of the ex ante risk of future generations inheriting a particular amount of transfer wealth. We find that, once ex ante insurance is taken into account, Social Security is welfare improving over the long-run as long as capital is not too productive and the transfer motive is not too strong. Altruists gain far less from Social Security than egoists.

JEL-codes: D91 E61 H55 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-age, nep-dge and nep-ias
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc16:145587

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