08 Apr 2008

Retirement Decisions, Benefits and the Neutrality of Pension Systems

Marek Góra

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European Network of Economic Policy Research Institutes (ENEPRI) Research Report No. 51  / 17 pages

This study discusses the pension system as an institutional structure for intergenerational exchange. The concept of intergenerational equilibrium is introduced as a condition for pension system stability, reducing labour market distortions as well as reaching social policy goals such as giving equal value to the welfare of each generation. The changing population structure has led to diminishing control of the division of GDP between the working and retired populations. The cost imposed on the working generations poses a growing risk of poverty among them and their families. The key feature of the pension system should be its neutrality. This report presents the main dimensions of the desired neutrality, exploring macro, individual, social and psychological neutrality.

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