In this paper, we consider how the hours of work and retirement age ought to respond to a change in the uncertainty of the length of life. In a first best framework, where a benevolent government exercises perfect control over the individuals' labor supply and retirement-decisions, the results...

There exists a wide variety of tax treatments of pensions across the world. And the reasons for such a range of regimes are not clear. This note reviews the general principles of pension taxes and analyses the theoretical foundations of why pension incomes ought to be taxed specifically. To do...

We investigate the responsiveness of individual retirement decisions to changes in financial incentives. A reform increased women's normal retirement age (NRA) in two steps from age 62 to age 63 first and then to age 64. At the same time retirement at the previous NRA became possible at a...

Aging creates financial troubles for PAYG pension systems, since the share of retirees to workers increases. An often advocated policy response is to increase retirement age. Ironically, however, the political support for this policy may actually be hindered by population aging. Using Swiss...

The recent financial crisis and historical record suggest important lessons about the design of national pension systems. First, wide fluctuation in asset returns makes it hard for well-informed savers to select a saving rate or a sensible investment strategy for DC pensions. Workers who follow...

In this paper we address the question how the generosity of the benefit rule of the German public pension system has changed during the past three decades and how this development can be explained by demographic changes. Firstly, we illustrate the political risk of benefit rule changes for...

Many countries, in an effort to address the problem that too many retirees have too little saved up, impose mandatory contributions into retirement accounts, that too, in an age-independent manner. This is puzzling because such funded pension schemes effectively mandate the young, who wish to...

This paper documents and analyzes an important and puzzling stylized fact about retirement behavior: the large concentration of job exits at specific ages. In Germany, almost 30% of workers retire precisely in the month when they reach one of three statutory retirement ages, although there is...

We find that segments of society who have shorter life expectancy can expect a lower retirement income and lifetime utility due to the longevity of other groups participating in the same pension scheme. Linking retirement age to average life expectancy magnifies the negative effect on the...

We study the sustainability of pension systems using a life-cycle model with distortionary taxation that sets an upper limit to the real value of tax revenues. This limit implies an endogenous threshold dependency ratio, i.e. a point in the cross-section distribution of the population beyond...