Abstract
Abstract For decades, economists have been urging politicians to reform pension systems, but in many cases the proposals have been rejected by referring to unresolved distributional aspects. This dilemma can be avoided by using the concept of constitutional economics, which allows us to address the issues of efficiency and justice at the same time. We conclude that a society behind a veil of uncertainty would settle for a compulsory pay-as-you-go pension system which provides a minimum pension. However, to avoid the system being undermined by free-riding (due to wrong expectations regarding the returns to investments on human capital), such a benefit would be granted according to the individual contribution to the accumulation of human capital. In addition, everyone would be obliged to save individually to secure a minimum pension.
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