Palacios, Robert and Whitehouse, Edward (1998): The Role of Choice in the Transition to a Funded Pension System.
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A critical question in the transition to a funded, private pension system is whether the new private element is presented as a mandate or choice to current and future workers. This paper sets out the spectrum of available options and looks at policy in 13 reforming countries. It concludes that older workers are best excluded from reform, because the economic benefits are small and the political resistance is likely to be large if they are included. However, a defined cut-off age is arbitrary for reasons of intergenerational equity and heterogeneity of portfolio composition and risk preferences within cohorts. A voluntary switch is preferred. The main objection is the resulting uncertainty over the numbers switching. Analysis of reforming countries shows however, a consistent and rational pattern of switching. The paper concludes by discussing policy options for managing the switching process.
|Item Type:||MPRA Paper|
|Original Title:||The Role of Choice in the Transition to a Funded Pension System|
|Keywords:||pensions; funding; pay-as-you-go|
|Subjects:||H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions
G - Financial Economics > G2 - Financial Institutions and Services > G23 - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
D - Microeconomics > D1 - Household Behavior and Family Economics > D14 - Personal Finance
|Depositing User:||Edward Whitehouse|
|Date Deposited:||21. Mar 2009 01:50|
|Last Modified:||13. Feb 2013 09:40|
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