Collective versus Individual Pension Schemes: a Welfare-Theoretical Perspective

Ed Westerhout (e.w.m.t.westerhout@cpb.nl), Jan Bonenkamp and Peter Broer
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Ed Westerhout: CPB Netherlands Bureau for Economic Policy Analysis

No 287, CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: This paper explores the welfare effects of a number of collective pension contracts, distinguishing between the two welfare effects. We find that collective schemes can be either superior or inferior to individual schemes. Collective pension contracts allow for intergenerational risk sharing with the unborn. They therefore imply a higher level of social welfare than individual accounts. Collective pension contracts also imply a sub- optimal allocation of consumption across time periods and states of nature however. Hence, collective pension contracts also reduce social welfare. This paper explores the welfare effects of a number of collective pension contracts, distinguishing between the two welfare effects. We find that collective schemes can be either superior or inferior to individual schemes.

JEL-codes: H55 (search for similar items in EconPapers)
Date: 2014-10
New Economics Papers: this item is included in nep-age
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Citations: View citations in EconPapers (3)

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