Flexible Pension Take-Up in Social Security

40 Pages Posted: 18 Jul 2013

See all articles by Yvonne Adema

Yvonne Adema

CPB Netherlands Bureau of Economic Policy Analysis

Jan Bonenkamp

CPB Netherlands Bureau of Economic Policy Research

A. C. Meijdam

Tilburg University - Center for Economic Research (CentER); Tilburg University - Department of Economics

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Date Written: July 3, 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

Adema, Yvonne and Bonenkamp, Jan and Meijdam, A.C. (Lex), Flexible Pension Take-Up in Social Security (July 3, 2013). Netspar Discussion Paper No. 07/2013-020, Available at SSRN: https://ssrn.com/abstract=2295329 or http://dx.doi.org/10.2139/ssrn.2295329

Yvonne Adema (Contact Author)

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

Jan Bonenkamp

CPB Netherlands Bureau of Economic Policy Research ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

A.C. (Lex) Meijdam

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 23 85 (Phone)
+31 13 466 30 42 (Fax)

Tilburg University - Department of Economics

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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