Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/222017 
Year of Publication: 
2018
Series/Report no.: 
IEHAS Discussion Papers No. MT-DP - 2018/4
Publisher: 
Hungarian Academy of Sciences, Institute of Economics, Budapest
Abstract: 
At the design of public pension systems, the designers frequently neglect that higher earners statistically live longer, and possibly also retire later. Since the first difference has recently been rising steeply, this negligence is less and less tolerable, especially with nonfinancial defined contribution system (NDC). We analyze three simple connected pension models to understand how the redistribution from the low-earners to the high-earners can be reduced or reversed. Our answers: either mixing NDC and flat benefit or reducing the weight of wage indexation of benefits. It is an open question how the neglected behavioral reactions (lower share of NDC implies lower labor supply and greater tax evasion) influence the social welfare.
Subjects: 
public pension system
retirement age
wage indexation
wage-dependent life expectancy
JEL: 
D10
H55
Document Type: 
Working Paper

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