[Publisher:] Institut für Weltwirtschaft (IfW) [Place:] Kiel [Year:] 1997
Kiel Working Paper 816
The paper compares the pay-as-you-go system and a capital funded system of old age insurance. The capital funded system has a higher rate of return. Pension income can be obtained at lower costs for the individual. This implies efficiency gains in terms of higher savings and reduced distortion in the labor markets. Respecting the claims of the pay-as-you-go system implies a transition problem which is studied in detail.