Risk, Redistribution and Retirement The Role of Pension Schemes
This thesis studies the effects of redistribution and risk sharing in collective pensions on economic behaviour, with particular attention paid to the retirement decision.
Throughout the analysis, we make a clear distinction between redistribution and risk sharing. Risk sharing comes into play after a person for whatever reason suffers a loss and other people entirely or partially compensate him for that. This form of solidarity is the basic principle of insurance contracts. That means, ex ante, i.e., before the occurrence of an event, people do not know whether they will be net receivers or net contributors. To illustrate, people with fire insurance on their house do not know in advance whether they will have to claim or not at the moment the contract is signed. Redistribution, though, is a form of solidarity that is independent of a certain event occurring, but in advance, based on information about individual characteristics, leads to a certain transfer between participants. For example, highincome persons know that they will most likely transfer money to low-income persons when both types of individuals participate in a social security system with flat benefits (independent of past earnings).