Better Safe than Sorry - Individual Risk-Free Pension Schemes in the European Union
MPRA Paper No. 33571
25 Pages Posted: 22 Sep 2011 Last revised: 21 Feb 2012
Date Written: September 20, 2011
Abstract
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.
Keywords: pensions, labour market, monetary union, mobility
JEL Classification: G23, H55, H75, H83, J11, J26, J32, J61
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Charting the Economic Life Cycle
By Ronald D. Lee, Sang-hyop Lee, ...
-
A Global View on Demographic Pressure and Labour Market Participation
By Marga Peeters and Loek F. M. Groot
-
Demographic Change Across the Globe - Maintaining Social Security in Ageing Economies
By Marga Peeters and Loek F. M. Groot
-
The Life-Course Perspective and Social Policies: An Overview of the Issues
-
Fiscal Sustainability and Demographics - Should We Save or Work More?
-
Ageing and the Welfare State: Securing Sustainability
By Volker Meier and Martin Werding
-
Post-Productivism and Welfare States: A Comparative Analysis
-
Modelling Unemployment in the Presence of Excess Labour Supply - An Application to Egypt
-
The Demographic Dividend: Evidence from the Indian States
By Shekhar S. Aiyar and Ashoka Mody
-
MAKMODEL: A Macro-Econometric Model for the Republic of Macedonia
By Leo de Haan, Aneta Naumovska, ...