Collective Versus Individual Pension Schemes - A Welfare-Theoretical Perspective

fredag, 12 desember 2014

Collective pension contracts allow for intergenerational risk sharing with the unborn. They therefore imply a higher level of social welfare than individual accounts. Collective pension contracts also imply a suboptimal allocation of consumption across time periods and states of nature however. Hence, collective pension contracts also reduce social welfare.

This paper explores the welfare e ects of a number of collective pension contracts, distinguishing between the two welfare e ects. We nd that collective schemes can be either superior or inferior to individual schemes.