Peeters, Marga (2011): “Better Safe than Sorry” - Individual Risk-free Pension Schemes in the European Union - Macroeconomic Benefits, the Mobile Working Citizen’s Perspective and Why Nots.
This is the latest version of this item.
Download (1MB) | Preview
Variations between the diverse pension systems in the member states of the European Union hamper labour market mobility, across country borders but also within the countries of the European Union. From a macroeconomic perspective, and in the light of demographic pressure, this paper argues that allowing individual instead of collective pension building would greatly improve labour market flexibility and thus enhance the functioning of the monetary union. I argue that working citizens would benefit, for three reasons, from pension saving in a risk-free savings account. First, citizens would have a clear picture of the accumulation of their own pension savings throughout their working life. Second, they would pay hardly any extra costs and, third, once retired they would not be subject to the whims of government or other pension fund managers. This paper investigates the feasibility of individual pension building under various parameter settings by calculating the pension saved during a working life and the pension dis-saved after retirement. The findings show that there are no reasons why the European Union and individual member states should not allow individual risk-free pension savings accounts. This would have macroeconomic benefits and provide a solid pension provision that can enhance mobility, instead of engaging workers in different mandatory collective pension schemes that exist around in the European Union.
|Item Type:||MPRA Paper|
|Original Title:||“Better Safe than Sorry” - Individual Risk-free Pension Schemes in the European Union - Macroeconomic Benefits, the Mobile Working Citizen’s Perspective and Why Nots|
|Keywords:||pensions; labour market; monetary union; mobility; migration;|
|Subjects:||H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions
J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J32 - Nonwage Labor Costs and Benefits; Private Pensions
G - Financial Economics > G2 - Financial Institutions and Services > G23 - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R23 - Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
J - Labor and Demographic Economics > J1 - Demographic Economics > J11 - Demographic Trends, Macroeconomic Effects, and Forecasts
H - Public Economics > H7 - State and Local Government; Intergovernmental Relations > H75 - State and Local Government: Health; Education; Welfare; Public Pensions
H - Public Economics > H8 - Miscellaneous Issues > H83 - Public Administration; Public Sector Accounting and Audits
J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J61 - Geographic Labor Mobility; Immigrant Workers
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J26 - Retirement; Retirement Policies
|Depositing User:||Marga (H.M.M.) Peeters|
|Date Deposited:||21. Feb 2012 11:33|
|Last Modified:||19. Feb 2013 18:52|
Adema, Willem and Maxime Ladaique, 2009, How expensive is the welfare state? Gross and net indicators in the OECD social expenditures database (SOCX), OECD Social, Employment and Migration Working Papers 92.
Arza, Camila and Martin Kohli, 2008, Pension reform in Europe: Politics, policies and outcome, New York 109-131.
Borgy, Vladimir and Xavier Chojnicki, 2008, Labor migration: Macroeconomic and demographic outlook for Europe and neighbourhood regions, Center for Social and Economic Research (CASE) Warsaw.
Börsch-Supan, Axel, 2006, European welfare state regimes and their generosity towards the elderly, The Levy Economics Institute of Bard College Working Paper no 479.
Bovenberg, Lans, Ralph Koijen, Theo Nijman and Coen Teulings, 2007, Saving and investing over the life cycle and the role of collective pension funds, De Economist 155(4):347-415.
Cavelaars, Paul and Jeroen Hessel, 2007, Regional labour market mobility in the European Union: Adjustment mechanism or disturbance? DNB Working Paper 137, see also article titled Labour mobility in the euro area, Quarterly Bulletin of the Dutch central bank in June 2001:48-52.
Diamond, Peter A., 1999, Administrative costs and equilibrium charges with individual accounts, NBER Working Papers 7050.
European Commission Directorate-General for Employment, Social Affairs and Inclusion and Eurostat, the Statistical Office of the European Union, 2011, Demography Report 2010 – Older, more numerous and diverse Europeans, Commission Staff Working Document.
European Commission Directorate-General for Employment, Social Affairs and Inclusion, 2010a, Green Paper – towards adequate, sustainable and safe European pension systems, SEC(2010)830.
European Commission Directorate-General of Economic and Financial Affairs, 2010b, Progress and key challenges in the delivery of adequate and sustainable pensions in Europe, European Economy Occasional Papers 71.
Fuchs, Michael, Aaron G. Grech and Asghar Zaidi, 2006, Pension policy in EU25 and its possible impact on elderly poverty, LSE STICERD Research Paper no CASE 116.
Groot, Loek and Marga Peeters, 2011, A global view on demographic pressure and labour market participation, MPRA 32057.
Hinz, Richard, Heinz Rudolph, Pablo Antolin and Juan Yermo, (eds.) 2010, Evaluating the financial performance of pension funds, World Bank.
Holzmann, Robert and Robert Palacios, 2001, Individual accounts as social insurance: A World Bank perspective, World Bank Discussion Paper 0114.
Huber, Peter, 2004, Inter-regional mobility in Europe – A note on the cross-country evidence, Applied Economics Letters 11(10):619-24.
Jarret, Peter, 2011, Pension reforms in Poland and elsewhere: The view from Paris, Center for Social and Economic Research (CASE) Network studies & analyses no 425, Warsaw, Poland.
Jorion, Philippe and William N. Goetzmann, 1999, Global stock markets in the twentieth century, Journal of Finance 54(3):953-980.
Jousten, Alain and Pierre Pestieau, 2002, Labor mobility, redistribution and pension reform in Europe, NBER Chapters: in Social security pension reform in Europe 85-108 with comments from Michael Burda.
Milevsky, Moshe A., 2009, Are you a stock or a bond? Create own pension plan for a secure financial future, Financial Times Press, ISBN 978-0-13-712737-5, 240 pages.
Mitchell, Olivia, 1996, Administrative costs in public and private retirement systems, NBER Working Paper 5734.
Organisation for Economic Cooperation and Development, Society at a glance, 2011.
Peeters, Marga and Ard den Reijer, 2011, Wage formation, wage flexibility and wage coordination – A focus on the wage impact of productivity in Germany, Greece Ireland, Portugal, Spain and the United States, MPRA 31102.
Pozen, Robert C. and Theresa Hamacher, 2011, The fund industry: How your money is managed, Wiley and Sons.
Razin, Assaf and Efraim Sadka, 1999, Migration and pension with international capital mobility, Journal of Public Economics 74(1):141-150.
Sinha, Tapen, 2002, Can Latin American’s experience teach us something about privatized pensions with personal accounts?, paper presented at Retirement Implications of Demographic and family change symposium, San Francisco.
Van Groezen, Bas, Hannah Kiiver and Brigitte Unger, 2009, Explaining Europeans’ preferences for pension provision, European Journal of Political Economy 25:237-246.
Van Vliet, Olaf, Jim Been, Koen Caminada and Kees Goudswaard, 2011, Pension reform and income inequality among the elderly in 15 European countries, MPRA 32940.
Available Versions of this Item
“Better Safe than Sorry” - Individual Risk-free Pension Schemes in the European Union - Macroeconomic Benefits, the Mobile Working Citizen’s Perspective and Why Nots. (deposited 20. Sep 2011 17:36)
- “Better Safe than Sorry” - Individual Risk-free Pension Schemes in the European Union - Macroeconomic Benefits, the Mobile Working Citizen’s Perspective and Why Nots. (deposited 21. Feb 2012 11:33) [Currently Displayed]