Redistributive effects of different pension systems when longevity varies by socioeconomic status

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SRLP_JEOA02.pdf

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http://eprints.org/relation/isVersionOf https://pure.iiasa.ac.at/id/document/90300 http://eprints.org/relation/isVolatileVersionOf https://pure.iiasa.ac.at/id/document/90300 http://eprints.org/relation/isIndexCodesVersionOf https://pure.iiasa.ac.at/id/document/90300 archive 353 disk0/00/01/64/68 2020-05-13 10:59:06 2021-08-27 17:33:00 2020-05-13 10:59:06 article show Sanchez-Romero M. Lee R.D. Fürnkranz-Prskawetz A. 2025 Redistributive effects of different pension systems when longevity varies by socioeconomic status pub prog_pop We propose a general analytical framework to model the redistributive features of alternative pension systems when individuals face ex ante differences in mortality. Differences in life expectancy between high and low socioeconomic groups are often large and have widened recently in many countries. Such longevity gaps affect the actuarial fairness and progressivity of public pension systems. However, behavioral responses to longevity and policy complicate analysis of possible reforms. Here we consider how various pension systems would perform in an OLG setting with heterogeneous longevity and ability. We evaluate redistributive effects of three Notional Defined Contribution plans and three Defined Benefit plans, calibrated on the US case. Compared to a benchmark non-redistributive plan that accounts for differences in mortality, US Social Security reduces regressivity from longevity differences, but would require group-specific life tables to achieve progressivity. Moreover, without separate life tables, despite apparent accounting gains, lower income groups would suffer welfare losses and higher income groups would enjoy welfare gains through indirect effects of pension systems on labor supply. 2020-10 published Elsevier 10.1016/j.jeoa.2020.100259 100 public The Journal of the Economics of Ageing 17 e100259 TRUE 2212-828X Ageing Europe: An application of National Transfer Accounts (NTA) for explaining and projecting trends in public (AGENTA, FP7 613247) FALSE yes info:eu-repo/grantAgreement/EC/FP7/613247/EU/Ageing Europe: An application of National Transfer Accounts (NTA) for explaining and projecting trends in public finances/AGENTA info:eu-repo/semantics/article info:eu-repo/semantics/openAccess