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https://doi.org/10.3935/rsp.v9i3.160
Reforming Pensions: Myths, Truths and Policy Choices
Nicholas Barr
; Department of Economics, London School of Economics and Political Science
Abstract
This paper discusses the building blocks of pension reform in the light of economic theory, and their application to different types of economy. The opening section sets out the simple economics of pensions. The second section discusses a series of myths which have proved remarkably persistent. Building on this analysis, the latter part of the paper sets out the foundations of effective pensions policy. The third section discusses the prerequisites which any pension reform must respect, i.e. those things which policy advisers can – and should – assert authoritatively. The fourth section turns to the range of choices facing policymakers, drawing on the very different arrangements in different countries. The main conclusions are threefold: (1) The key variable is effective government. (2) From an economic perspective, the difference between pay-as-you-go and funding is second order. (3) The range of potential choice over pension design is wide. One size does not fit all.
Keywords
pension reform; pension reform myths; pay-as-you-go; capitalisation; efficient management
Hrčak ID:
30107
URI
Publication date:
1.3.2002.
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