This chapter discusses pension systems in various types of socioeconomic changes. Section 1.1 begins by classifying six generic pension systems. Section 1.2 considers the consequences, in the context of each system, of socioeconomic changes for the intergenerational distribution of income, risk sharing, and macroeconomic balance. Endogenous behavioral adjustments in response to welfare-state arrangements, in particular via disincentive effects on work and saving, are also introduced. Section 1.3 presents marginal reforms, which include both ad hoc policy measures and various automatic...

This chapter discusses pension systems in various types of socioeconomic changes. Section 1.1 begins by classifying six generic pension systems. Section 1.2 considers the consequences, in the context of each system, of socioeconomic changes for the intergenerational distribution of income, risk sharing, and macroeconomic balance. Endogenous behavioral adjustments in response to welfare-state arrangements, in particular via disincentive effects on work and saving, are also introduced. Section 1.3 presents marginal reforms, which include both ad hoc policy measures and various automatic adjustment mechanisms. Section 1.4 discusses two radical reforms, namely, a shift to either a quasi-actuarial system characterized by a strong link between contributions and benefits, or to a fully funded pension system with a capital-market rate of return on the contributions. Section 1.5 considers adjustments of various pension systems to increased heterogeneity of individuals and households, while Section 1.6 draws conclusions. A discussion summary is included at the end of the chapter.