Reforming Pensions: Myths, Truths, and Policy Choices

August 1, 2000

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper discusses the strategic building blocks of pension reform. The early sections set out the simple economics of pensions and discuss a series of myths which have proved remarkably persistent. Subsequent sections draw together the conclusions for policy design from earlier theoretical discussion, set out the prerequisites which any pension reform must respect, and discuss the range of choices facing policymakers. The main conclusions are threefold: the key variable is effective government; from an economic perspective the difference between PAYG and funding is second order; and the range of potential choice over pension design is wide.

Subject: Aging, Expenditure, Labor, Pension spending, Pensions, Population and demographics, Retirement

Keywords: Aging, demographic change, excess demand, funding, Global, government-operated fund, interest rate, net present value, Pay-As-You-Go, PAYG pension, PAYG scheme, Pension spending, Pensions, private sector, public spending, rate of return, Retirement, retirement age, state scheme, U.K. government actuary, WP

Pages:
56
Volume:
2000
DOI:
https://doi.org/10.5089/9781451856033.001
Issue:
139
Series:
Working Paper No. 2000/139
Stock No:
WPIEA1392000
ISBN:
9781451856033
ISSN:
1018-5941

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