The future of pension systems in europe: a reappraisal

Juan F Jimeno and Franco Peracchi
Authors registered in the RePEc Author Service: Michele Boldrin and Juan J. Dolado

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: In this paper we examine and ultimately challenge the traditional viewpoint on the future of current pension systems in Europe, according to which the effects of the ageing bomb will inevitably bring down our unfunded PA YG public pension systems. First, we claim that the projected dramatic increase in the pension burden in mostly due to labour market problems and the generosity of the system, rather than to demographic factors. Secondly, we conclude that a fully funded system cannot be achieved without a substantial reduction in current pension payments unless it is financed by issuing earnmarked public debt. Finally we claim that a socially efficient pension system should be a mixed one, partly funded and partly PA VG, on the basis of optimal portfolio allocation in a context of uncertain returns to both human and physical capital and on the role ofPAYG for financing the accumulation of human capital.

Keywords: Pension; systems; Funded; and; unfunded; systems; Human; and; physical; capital; accumulation (search for similar items in EconPapers)
Date: 1999-07
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:6153

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