Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/216572
Authors: 
Beetsma, Roel
Komada, Oliwia
Makarski, Krzysztof
Tyrowicz, Joanna
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper 8176
Abstract: 
We analyze the political stability of capital funded social security. In particular, using a stylized theoretical framework we study the mechanisms behind governments capturing pension assets in order to lower current taxes. This is followed by an analysis of the analogous mechanisms in a fully-edged overlapping generations model with intra-cohort heterogeneity. Funding is efficient in a Kaldor-Hicks sense. Individuals vote on capturing the accumulated pension assets and replacing the funded pension pillar with a pay-as-you-go scheme. We show that even if capturing assets reduces welfare in the long run, it always has sufficient political support from those alive at the moment of the vote.
Subjects: 
funded pensions
asset capture
majority voting
welfare
JEL: 
H55
D72
E17
E27
Document Type: 
Working Paper

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