Mandatory Defined‐Contribution Pension Systems: Progress — or Regression?

John A. Turner

International Social Security Review, 2000, vol. 53, issue 4, 25-36

Abstract: While mandatory defined‐contribution pension systems can be designed so that they are neutral or progressive in their effects on income distribution, a number of features they commonly contain are regressive. In determining whether a defined‐contribution system is neutral or regressive, it is important to examine its actual features rather than a stylized version. Because administrative costs for managing financial accounts often are the same for large‐ or small‐value accounts, there is a tendency for for‐profit financial institutions to charge flat‐rate fees or fees that, in relation to account balances, are higher for small accounts than for large accounts. These fees are one of the reasons why defined‐contribution system tend to be regressive.

Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:wly:intssr:v:53:y:2000:i:4:p:25-36

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