Why Funding is not a Solution to the "Social Security Crisis"

Friedrich Breyer

No 328, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: It is now a commonplace that the unfunded public pension systems of many OECD countries will run into severe financing problems in the coming decades due to a dramatically increasing pensioner/worker ratio. While this diagnosis is completely undisputed, there is still a vigorous debate on the appropriate therapy. In this debate, a number of proposals have been brought forward in particular in the last five years, which mainly consist in a (partial) transition to a funded pension system. Because such a transition is not a Pareto improvement, it is necessary to ask what can be the policy target that justifies such a redistributive move? The present paper tries to examine this question by identifying seven fallacies that are commonly made by advocates of such a transition.

Keywords: Pareto improvement; transition to funding; Social security; policy proposals (search for similar items in EconPapers)
JEL-codes: H55 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2001-07
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Citations: View citations in EconPapers (5)

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Working Paper: Why Funding Is not a Solution to the "Social Security Crisis" (2001)
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