Reforming Social Security: Issues and Challenges for Personal Retirement Accounts
East and West Studies, Vol. 19, No. 1, pp. 215-242, 2007
Posted: 9 Dec 2009
Date Written: July 1, 2007
Abstract
We seek to analyze a number of important issues related to the ownership of government pensions, and the switch from pay-as-you-go defined-benefit pensions to fully-funded defined-contribution pensions. Social Security will still need to find ways to cover its unfunded liabilities to past and present retirees, as well as to workers who have paid into the system. Also, will participation be voluntary or mandatory, will annuitization be required, and how freely can participants choose their investment strategy? An assessment of personal accounts must also fully incorporate the role of disability benefits and survivor benefits. Finally, what will happen in the new system if the accounts do not achieve their expected returns? We use the example of the United States to highlight many important issues faced by countries looking to use defined-contribution pensions as a response to aging populations.
Keywords: Social Security Reform, Personal Retirement Accounts, Public Finance
JEL Classification: H55
Suggested Citation: Suggested Citation