Chapter

Misleading Guides to Pension Design

Nicholas Barr

in The Welfare State as Piggy Bank

Published in print May 2001 | ISBN: 9780199246595
Published online November 2003 | e-ISBN: 9780191595936 | DOI: http://dx.doi.org/10.1093/0199246599.003.0007
 Misleading Guides to Pension Design

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This chapter summarizes core controversies about pensions by focusing on ten persistent myths about pension design that have clouded discussion, many of them centred on the debate about the respective merits of funded pensions (in which today's pensions are paid out of previously accumulated contributions) and Pay‐As‐You‐Go arrangements (in which today's pensions are paid out of today's contributions). Analysis of pensions needs to draw on microeconomics, macroeconomics, financial economics, and an understanding of the theory of social insurance. Many of the myths – relating to demographic change, savings, economic growth, public spending, and labour supply – are based on analysis that is incomplete because it omits one or more of these components.

Keywords: demographic change; economic growth; funded pensions; labour supply; Pay‐As‐You‐Go pensions; pension design; public spending; savings

Chapter.  13066 words. 

Subjects: Public Economics

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