The Gains from Pension Reform

Assar Lindbeck and Mats Persson ()
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Mats Persson: Institute for International Economic Studies, Postal: Stockholm University, SE-106 91 Stockholm, Sweden

No 580, Working Paper Series from Research Institute of Industrial Economics

Abstract: We characterize pension systems along three dimensions: 1) actuarial vs. non-actuarial, 2) funded vs. pay-as-you-go, 3) defined-contribution vs. defined-benefit. Increasing the degree of actuarial fairness, by strengthening the linkage between contributions and benefits, reduces labor market distortions and may increase welfare in a Pareto-efficiency sense. Increasing the degree of funding implies mainly a redistribution of income among generations, although a partial shift to funding also provides better risk-return combinations for individuals. Shifting from defined-benefit to defined-contribution schemes (with fixed contribution rates) shifts the income risk from workers and taxpayers to pensioners.

Keywords: Social security; Funding (search for similar items in EconPapers)
JEL-codes: H55 (search for similar items in EconPapers)
Date: 2002-05-27
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Related works:
Working Paper: The Gains from Pension Reform (2002)
Journal Article: The Gains from Pension Reform (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:hhs:iuiwop:0580

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