Government mandated private pensions: a dependable foundation for retirement security?

Rowena Pecchenino and Patricia Pollard ()

No 1999-012, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We develop a model of an overlapping generations economy characterized by private pensions where risk averse agents face both longevity and investment risks. The government mitigates the effects of longevity risk by mandating that individuals purchase annuities. Investment risk arises since the returns on annuities deviate randomly from actuarial fairness as a result of differences in the costs of administering pension funds. Thus, identical agents' pensions may yield drastically different returns: the government's pension policy is not horizontally equitable. We examine whether policies exist that can achieve horizontal equity, and discuss the costs and benefits of implementing these policies.

Keywords: Social security; Pensions; Retirement (search for similar items in EconPapers)
Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://s3.amazonaws.com/real.stlouisfed.org/wp/1999/1999-012.pdf Full text (application/pdf)

Related works:
Working Paper: Government Mandated Private Pensions: A Dependable Foundation for Retirement Security? (1999)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:1999-012

Ordering information: This working paper can be ordered from

DOI: 10.20955/wp.1999.012

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of St. Louis Contact information at EDIRC.
Bibliographic data for series maintained by Scott St. Louis ().