Reforming the Retirement Scheme: Flexible Retirement versus Legal Retirement Age

Juan A. Lacomba and Francisco Lagos

FinanzArchiv: Public Finance Analysis, 2012, vol. 68, issue 3, 252-268

Abstract: We compare a social security system where people can retire at an age of their own choice with one in which there is a legal retirement age elected through a majority voting process. We show that individuals prefer a legal retirement age higher than the one they would choose in the flexible scheme. In spite of this, we show that when the legal retirement age significantly limits the retirement age of high-wage workers, a flexible scheme would improve the financing of the pension system. Finally, we show that even when pension benefits are higher with a legal retirement age, a flexible system might be implemented.

Keywords: social security; flexible retirement; legal retirement age (search for similar items in EconPapers)
JEL-codes: H55 J26 (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1628/001522108X653831

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