Public Pension Programs Research Articles

The old-age security hypothesis revisited

Children's altruism toward parents is allowed in a two-overlapping-generations model with endogenous fertility. Parents raise children because, when retired, they expect gifts from their children who are essentially a capital good. Individuals' behavior between generations is examined by analyzing a Nash equilibrium, which is then compared with a social planner's optimal allocation. The pay-as-you-go public pension program is viewed as the optimal gifts from the optimal allocation when the latter is implemented. The effect on fertility of the introduction of a capital market is also analyzed. The validity of the old-age security hypothesis is shown to depend on the parameters of utility and cost functions.

Labor Unions, Employee Benefits, and the Privatization of the American Welfare State

The “exceptional” nature of American politics has been a favorite theme of scholars since Tocqueville. One of the more famous “exceptions” has been the distinctive development of its welfare state. The United States has perennially been portrayed as the laggard among advanced industrial societies. Indeed, it adopted public pension and insurance programs at a later date than most European societies, and its programs cover smaller portions of the population and address fewer social problems.

The Economic Implications of Japan's Aging Population

The impact of demographic aging in Japan on its economy is analyzed using data from official sources. Consideration is given to the effects of increased life expectancy and of the decline in the birth rate on the populations age structure. Japans economic situation is discussed with a focus on both government expenditures on public pension programs and labor and economic policies. The author concludes that according to the [International Monetary Fund] government pension and medical care spending will jump from 9% of gross domestic product to 21.5% in the year 2025. (EXCERPT)

Lifetime income and public pension: An analysis of the effect on redistribution using a two-period analysis

This paper examines the redistributive effect of public pension programs in the framework of a two-period analysis. Private saving is also considered for comparison purposes as an alternative to public pension for assuring consumption during retirement. An emphasis is placed on investigating the effect of the various formulae for the determination of both the benefit level and the contribution, with the additional purpose of examining the effect of a maximum limit. The Japanese pension systems are evaluated on the basis of the above model framework in comparison with the British system.

Some Microeconometric Evidence Concerning the Effect of the Canada Pension Plan on Personal Saving

Growing criticism of Canada's retirement income system during the past few years has resulted in renewed pressure on both federal and provincial governments to expand public pension programmes, especially the Canada Pension Plan (CPP). Once again, this prospect has aroused fears that an unfunded expansion of the public pension system could have a seriously adverse effect on personal saving. The adverse effect on personal saving, it is argued, could in turn lower investment and thereby reduce even further what is already, by postwar standards, an extremely sluggish rate of productivity growth for the Canadian economy. However, the basis for fearing that public pensions may reduce household saving is somewhat questionable. Since the wealth replacement effect of public pensions on saving may be offset by an induced retirement effect, and perhaps by inter-generational transfers in the form of bequests, the theory at least is inconclusive in this regard.1 Surprisingly enough, unlike in the United States, where the theoretical indeterminacy concerning the overall impact of public pensions on saving has spawned a multitude of empirical studies, the subject has been largely ignored by econometricians in Canada. But sparse though the empirical evidence may be, it does not support the seemingly popular contention that public pensions reduce personal saving. In the only published empirical study to date, Boyle and Murray (1979) conclude from their analysis of time-series data that Canada's public pension plans have had no visible effect on household savings behaviour. This paper presents some cross-sectional evidence on the response of personal saving to public pensions, which appears to conflict with the Boyle and Murray findings. It is organized as follows: Section I describes the methodology and the data base used; the empirical results are analysed in Section II; some conclusions follow in Section III.

The Impact of Public Pensions on Personal Retirement Saving in Canada: Some Evidence from Cross-Section Data

During recent years much attention has been focused on the question of whether or not public retirement income systems have an adverse on personal saving. The concern has been expressed in a number of countries that if there is any reduction in saving, it could result in a lower rate of capital accumulation and, as a consequence, slower productivity growth. Unfortunately, the, theoretical literature on the subject is inconclusive. Within the framework of a life-cycle model where saving and retirement decisions are made jointly, the overall of public pensions is ambiguous, depending on the relative strengths of the wealth replacement effect and the induced retirement effect [9; 10]. The former reduces saving while the latter tends to increase it. The issue is further complicated by the possibility that individuals might attempt to vitiate what the public pension system does through offsetting changes in private intergenerational transfers in the form of bequests [1; 14]. It would appear, therefore, that only empirical evidence can determine the extent to which public pensions affect personal saving. Whereas in the United States a great deal of research, much of it with conflicting results,' has been devoted to shedding further light on this very important issue, in Canada the subject has been somewhat neglected. What little evidence there is, however, lends little support to the popular view that public pension programs such as Old Age Security (OAS) and the Canada Pension Plan (CPP) have had a negative on saving. Boyle and Murray, in their recent study, conclude from time series regressions that Canada's public pension plans have had no visible on household savings behaviour [2,467].

Reforming Canada's Retirement Income System: The Potential Role of RRSPs

Growing criticism of Canada's existing retirement income system has resulted in increased pressure on the government either to expand public pension programs or to introduce legislation requiring employers to establish pension plans with compulsory participation by all employees. This paper re-examines the role of Registered Retirement Savings Plans in the current system and suggests how that role might be enhanced. It is argued that, with some modifications to the present tax provisions governing RRSPs, these personal savings schemes are a viable and equitable alternative to an expanded public pension system or mandatory employer-sponsored plans.

Selective Retirement and Preretirement Counseling in the TVA

Under the impact of the marked increase in the number and coverage of public and private pension programs, retirement policies and practices are beginning to occupy a place in the front rank of current personnel and labor relations issues. Two such issues are whether retirement should be mandatory at a fixed age and whether employers should be obligated to assist in preparing employees to meet the social and psychological as well as the financial problems of the retirement period. The recent experience of the Tennessee Valley Authority with selective retirement and a preretirement counseling program is described and evaluated in this article. (Author's abstract courtesy EBSCO.)

Some Implications of Private Pension Funds

Wartime wage controls, excess profit taxation and union pressure have encouraged a marked expansion in private pension programs during the past decade. Reserves for these programs are now estimated to be between seventeen and twenty billion dollars and may well approach forty billion dollars by 1960.' Unless adequate adjustments are made in the social security program, an ultimate figure of seventy-five billion dollars is entirely conceivable. In view of the potential magnitude of these reserves it is interesting to examine certain theoretical implications of private pension programs. Attention is directed first to the essential differences between public and private pension programs. An attempt is then made to show that the federal government may feel impelled to finance indirectly the growth of private pension funds. Consideration is given finally to the influence of this new investment channel upon the capital market.

Workmen's Compensation and Private Benefit Programs

As our provisions for economic security expand to cover more risks and more people, the American social security system grows increasingly complex. Much has been written on the relationships--actual and theoretical--between public and private pension programs, but only scanty information is available on the relationships between private health, welfare, and pension plans and our oldest social security program, workmen's compensation insurance. There are good reasons for this lack of information. Workmen's compensation has well-developed traditions of separatism. It functions under the aegis and direction of insurance companies, physicians, and attorneys. Until recently, compensation issues have received limited consideration from economists, political scientists, and industrial relations specialists. This paper, therefore, proposes to do two things: (1) It will describe and analyze some of the private plan provisions which are supplementing, duplicating, or perhaps undercutting state workmen's compensation plans and benefits. (2) It will discuss the implications these private provisions may have for the future of workmen's compensation. (Author's abstract courtesy EBSCO.)

Income Maintenance for the Aged

T HE year 1951 was a very important milestone so far as income for the aged was concerned. For the first time in our nation's history the number of persons receiving old-age insurance exceeded the number receiving old-age assistance (February). Likewise, for the first time, the total amount of insurance payments to aged persons exceeded the amount of old-age assistance payments (August). The number of aged persons on the assistance rolls declined slowly and steadily in 1951 from the high of September 1950, while the number receiving insurance steadily increased (see chart). At the end of 1951, over 4 million persons, representing nearly one-third of the population aged 65 and over,1 were receiving some form of public insurance benefit or pension or were the wives of such recipients. About 85 to 90 per cent of all persons working for a living were earning credits under some public retirement or pension program. Despite these noteworthy developments, there are still many aged persons with inadequate incomes, many pressing problems with respect to income for the aged still unsolved or awaiting consideration, and a need for much more information on the economic status of the aged.2 Some. of the most important of these pressing problems