Working Papers, Department of Economics, Lund University
Pension Reforms; Effects on Intergenerational Risk-Sharing and Redistribution
Abstract: Projections show public pensions to take an increasing
share of GDP. This has lead to increased activity in the reform area and
resulted in a plethora of reforms ranging from marginal to more radical
ones. The former kind has often tried to hold back increasing expenditure
by decreasing benefit levels, increasing statutory retirement age etc.,
while the latter may be exemplified by the Italian or Swedish reforms. The
marginal reforms implemented give an impression of being rather haphazard.
Accelerating expenditures seem to justify all forms of reduction; if the
indexing has been by wages, then the change is to price indexing, and vice
versa. In this paper the analysis of reforms will concentrate on the
different kinds of risks or threats a pension system is exposed to, notably
economic, demographic and political risks and how these risks change with
differently designed reforms. The paper will also treat distribution
effects of different designs and of the risk exposure. What does the
experience of 30 - 40 years of public pension systems tell us about the
effects of different designs? Are there any recommendations to be drawn
from economic theory?
Keywords: Social insurance; pensions; intergenerational risk-sharing; (follow links to similar papers)
JEL-Codes: H55; J14; J26; (follow links to similar papers)
19 pages, November 1, 2000
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