Can and SHould a Pay-as-You-Go Pension System Mimic a Funded System?

Assar Lindbeck and John Hassler ()

Research Institute of Industrial Economics Working Papers from Research Institute of Industrial Economics (IFN)

Abstract: 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 tranfers are implemented.

Keywords: PENSION; FUNDS (search for similar items in EconPapers)
JEL-codes: H55 G23 (search for similar items in EconPapers)
Date: 1998
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Working Paper: Can and Should a Pay-As-You-Go Pension System Mimic a Funded System? (1998)
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Persistent link: http://EconPapers.repec.org/RePEc:fth:iniesr:499

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