Flexible Pension Take-Up in Social Security
CentER Discussion Paper Series No. 2013-043
40 Pages Posted: 21 Aug 2013
There are 3 versions of this paper
Flexible Pension Take-Up in Social Security
Flexible Pension Take-Up in Social Security
Flexible Pension Take-Up in Social Security
Date Written: July 4, 2013
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, where individuals differ in ability and life span. 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 life expectancy. Introducing actuarial non-neutrality that stimulates later retirement further improves such a flexibility reform.
Keywords: redistribution, retirement, flexible pensions
JEL Classification: H55, H23, J26
Suggested Citation: Suggested Citation