Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108318
Authors: 
Simonovits, András
Year of Publication: 
2013
Series/Report no.: 
IEHAS Discussion Papers MT-DP - 2013/36
Abstract: 
In our model, the government operates a mandatory proportional pension system to substitute for the low life-cycle savings of the lower-paid myopes, while maintaining the incentives of the higher-paid, far-sighted in contributing to the system. The introduction of an appropriate cap on pension contribution (or its base) raises the optimal contribution rate, helping more the myopes and making more room for the saving of high-paid far-sighted workers. The cap has quite a weak impact on the social welfare in a relatively wide interval but the maximal welfare is higher than the capless welfare by 0.3-4.5%.
Subjects: 
pensions
contribution rate
contribution cap
maximum for taxable earnings
JEL: 
H53
H24
ISBN: 
978-615-5243-96-7
Document Type: 
Working Paper

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