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Designing Benefit Rules for Flexible Retirement with or without Redistribution

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  • András Simonovits

Abstract

The traditional approach to flexible retirement (e.g. NDC) neglects the impact of asymmetric information on actuarial fairness (neutrality). The mechanism design approach (e.g. Diamond, 2003) gives up the requirement of neutrality and looks for a redistributive second-best benefit-retirement-age schedule. Trying to combine the two approaches, the present paper determines the neutral (redistribution-free) second-best solution. This neutral solution is, however, often Pareto-dominated by the redistributive one.

Suggested Citation

  • András Simonovits, 2004. "Designing Benefit Rules for Flexible Retirement with or without Redistribution," CESifo Working Paper Series 1370, CESifo.
    • Handle: RePEc:ces:ceswps:_1370
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    References listed on IDEAS

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    Cited by:

    1. Andras Simonovits, 2013. "Regressive intracohort redistribution in nonfinancial defined contribution pension," CERS-IE WORKING PAPERS 1312, Institute of Economics, Centre for Economic and Regional Studies.
    2. András Simonovits, 2006. "Optimal Design of Pension Rule with Flexible Retirement: The Two-Type Case," Journal of Economics, Springer, vol. 89(3), pages 197-222, December.
    3. Juan A. Lacomba & Francisco M. Lagos, 2009. "Reforming the retirement scheme: Flexible retirement vs. Legal retirement age," ThE Papers 09/01, Department of Economic Theory and Economic History of the University of Granada..
    4. Heidler, Matthias & Raffelhüschen, Bernd & Leifels, Arne, 2006. "Heterogenous life expectancy, adverse selection, and retirement behaviour," FZG Discussion Papers 13, University of Freiburg, Research Center for Generational Contracts (FZG).

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    Keywords

    flexible retirement; asymmetric information; actuarial fairness (neutrality); mechanism design;
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