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 language | English |
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Pages (from-to) | 316-342 |
Journal | International Tax and Public Finance |
Volume | 23 |
Issue number | 2 |
DOIs | |
Publication status | Published - Apr 2016 |
Keywords
- Redistribution
- Welfare
- Retirement
- Flexible pensions
- Actuarial adjustment