We identify several objectionable features of the German retirement benefit formula. Groups of insureds with higher than average life expectancy are subsidized by the rest of the members because the formula neglects differences in group-specific life expectancy. Moreover, undesirable long-run...

This paper studies the design of retirement and disability policies when individuals differ in both productivity and health. The second-best solution implies (downward) distortions in the (per-period) labor supply and in the choice of retirement age for some individuals, and lesser...

Are there still opportunities for welfare-improving reforms in unfunded pension systems? To answer this question, we analyze the intertemporal structure of implicit taxes in pay-as-you-go pension schemes. We demonstrate that these tax rates are declining over the life cycle. This timing is...

In several OECD countries, public pay-as-you-go pension systems have undergone major reforms in which future retirement benefit promises have been scaled down. A consequence of these reforms is that, especially in countries with a tight tax - benefit linkage, the retirement benefit claims of...