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  3. Journal of Economic Literature
  4. March 2003
  5. The Gains from Pension Reform

The Gains from Pension Reform

  • Assar Lindbeck
  • Mats Persson
Journal of Economic Literature
vol. 41, no. 1, March 2003
(pp. 74-112)
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Abstract

We classify social security pension systems in three dimensions: actuarial versus non-actuarial, funded versus unfunded, and defined-benefit versus defined-contribution systems. Recent pension reforms are discussed in terms of these dimensions. Shifting to a more actuarial system reduces labor-market distortions, although limiting the scope for redistribution. Shifting to a funded system may increase saving, redistribute income to future generations and distort contemporary labor supply. A partial shift to a funded system helps individuals diversify their pension assets. A shift from a defined-benefit to a defined-contribution system means that income risk will be shifted from workers to pensioners.

Citation

Lindbeck, Assar, and Mats Persson. 2003. "The Gains from Pension Reform ." Journal of Economic Literature, 41 (1): 74-112. DOI: 10.1257/002205103321544701

JEL Classification

  • H55 Social Security and Public Pensions
  • D91 Intertemporal Household Choice; Life Cycle Models and Saving