Working Paper Series
John Hassler and Assar Lindbeck
Can and Should a Pay-As-You-Go Pension System Mimic a Funded System?
Abstract: This paper considers the possibility of letting a pay-go
pension system mimic a fully funded pension system. Generically, it turns
out to be impossible to make a less than fully funded pension system
actuarially fair on average. But a non-funded pay-go pension system can
provide an actuarially fair implicit return on the margin, which increases
economic efficiency. The benefits of this fall entirely on current
pensioners as a windfall gain unless compensating transfers are
implemented. Such a system can be thought of as a pay-go system that mimics
a fully funded pension system in combination with lump transfers to current
pensioners from current and future workers.
Keywords: Pension systems; Pay-as-you-go; Actuarial; Funding; (follow links to similar papers)
JEL-Codes: H50; H55; H60; (follow links to similar papers)
18 pages, June 4, 1998
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