Flexible pension take-up in social security

Y. Adema, J. Bonenkamp, Lex Meijdam

Research output: Contribution to journalArticleScientificpeer-review

1 Citation (Scopus)

Abstract

This paper studies the redistribution and welfare effects of increasing the flexibility of individual pension take-up. We use an overlapping-generations model with Beveridgean pay-as-you-go pensions and heterogeneous individuals who differ in ability and lifespan. We find that introducing flexible pension take-up can induce a Pareto improvement when the initial pension scheme contains within-cohort redistribution and induces early retirement. Such a Pareto improving reform entails the application of uniform actuarial adjustment of pension entitlements based on average lifespan. Introducing actuarial non-neutrality that stimulates later retirement further improves such a flexibility reform.

Original languageEnglish
Pages (from-to)316-342
JournalInternational Tax and Public Finance
Volume23
Issue number2
DOIs
Publication statusPublished - Apr 2016

Keywords

  • Redistribution
  • Welfare
  • Retirement
  • Flexible pensions
  • Actuarial adjustment

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