Reforming Pensions: Myths, Truths, and Policy Choices

57 Pages Posted: 31 Jan 2006

Date Written: August 2000


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.

Keywords: Pensions, funding, Pay-As-You-Go, demographic change

JEL Classification: G23, H11, H40, H55, J14

Suggested Citation

Barr, Nicholas, Reforming Pensions: Myths, Truths, and Policy Choices (August 2000). IMF Working Paper No. 00/139, Available at SSRN:

Nicholas Barr (Contact Author)

London School of Economics ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 (0)20 7955 7482 (Phone)
+44 (0(20 7955 7546 (Fax)


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