Pension Design and General Public Finances: Beyond Baseline Actuarial Neutrality
By Didier Blanchet & Gilbert Cette
The design of pension benefits cannot be considered in disconnection from the constraints related to the general public finances. A change in the average retirement age has an impact not only on pension funding, but also on resources available for other public spending. Incorporating this externality implies penalties/bonuses for earlier/later retirement that are much higher than those designed to balance the pension system alone.
Source SSRN
