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| Reference : Collective Annuities and Redistribution |
| Scientific journals : Article | |||
| Business & economic sciences : Economic systems & public economics | |||
| http://hdl.handle.net/2268/16070 | |||
| Collective Annuities and Redistribution | |
| English | |
| Cremer, Helmuth [Toulouse School of Economics > > > >] | |
| Lozachmeur, Jean-Marie [Toulouse School of Economics > > > >] | |
Pestieau, Pierre  [Université de Liège - ULg > HEC-Ecole de gestion de l'ULg > HEC-Ecole de gestion de l'ULg >] | |
| 2010 | |
| Journal of Public Economic Theory | |
| Blackwell Publishing | |
| 12 | |
| 23-41 | |
| Yes (verified by ORBi) | |
| International | |
| 1097-3923 | |
| [en] This paper studies the role of alternative pension systems
that offer collective annuities. The defining characteristic of collective annuities is that they do not depend on an individual’s survival probabilities. We show that such a system may be welfare improving (with a utilitarian social welfare function) even when private annuity markets are perfect and when life expectancy and earning abilities are positively correlated (i.e., in a setting that is a priori biased against collective annuities). We first concentrate on linear pension systems and contrast two schemes: a pure contributory (Bismarckian) pension and a flat rate (Beveridgean) pension. We show that the case for collective annuities is stronger when they are associated with a flat pension system. Then we analyze nonlinear pension schemes.We show that the solution can be implemented by a pension scheme associated with annuities that reflect some degree of “collectiveness.” Unlike under pure collective annuities, benefits do depend on life expectancy but to a lesser degree than with actuarially fair private annuities. In other words, the impact of survival probabilities is mitigated rather than completely neutralized. | |
| Centre de Recherche en Économie Publique et de la Population - C.R.E.P.P | |
| http://hdl.handle.net/2268/16070 |
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