Designing Benefit Rules for Flexible Retirement with or Without Redistribution

19 Pages Posted: 10 Jan 2005

See all articles by András Simonovits

András Simonovits

Hungarian Academy of Sciences (HAS) - Research Centre for Economic and Regional Studies (HAS)

Date Written: December 2004

Abstract

The traditional approach to flexible retirement (e.g. NDC) neglects the impact of asymmetric information on actuarial fairness (neutrality). The mechanism design approach (e.g. Diamond, 2003) gives up the requirement of neutrality and looks for a redistributive second-best benefit-retirement-age schedule. Trying to combine the two approaches, the present paper determines the neutral (redistribution-free) second-best solution. This neutral solution is, however, often Pareto-dominated by the redistributive one.

Keywords: flexible retirement, asymmetric information, actuarial fairness (neutrality), mechanism design

JEL Classification: D82, D91, H55

Suggested Citation

Simonovits, András, Designing Benefit Rules for Flexible Retirement with or Without Redistribution (December 2004). Available at SSRN: https://ssrn.com/abstract=646044

András Simonovits (Contact Author)

Hungarian Academy of Sciences (HAS) - Research Centre for Economic and Regional Studies (HAS) ( email )

7621 Pécs, Papnovelde u. 22
Budapest, H-1112
Hungary

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