In this study, I try to summarize theoretical rather than practical issues of pension systems. My aim is to introduce the reader to the realm of pension models. Therefore I attempt to simplify the discussion as much as possible, and neglect a lot of complications. After presenting life-cycle...

In our model, the government operates a mandatory proportional (contributive) pension system to substitute for the low life-cycle savings of the low-paid myopes. The socially optimal contribution rate is high (equalizing young- and old-age consumption for them), while an appropriate cap on...

A general framework is analyzed which contains several special transfer (tax and pension) models. In our static two-overlapping-generation framework, every individual works in the first stage of the adult age, while is retired in the second. The government operates a balanced linear transfer...

The tax system redistributes labor incomes among workers, the pension system redistributes incomes from workers to pensioners. We consider a linear transfer system, where workers pay pension contributions and personal income taxes and pensioners receive proportional benefits, while workers and...

This paper discusses design errors in public pension systems, using Hungary as an illus-tration. When the communist political and economic system was replaced by democracy and market economy, the subsequent governments had even greater difficulties in designing consistent pension reforms than...

The dependence of benefit on the retirement age (the schedule) is an important feature in any public pension system. The nonfinancial defined contribution (NDC) pension system has recently become popular mainly because of its allegedly actuarial fairness. Using the framework of mechanism design...

Pension systems fight myopia and reduce old-age poverty. Our simple model introduces heterogeneous wages, flexible labor supply, progressive personal income tax and pension credit. The socially optimal transfer system is close to the means-tested one proposed by Feldstein (1987). -- myopia ;...