Can Improved Options for Private Saving Offer a Plausible Substitute for Public Pensions

Bibliographic Data

ID2317262
AuthorsGary Burtle (The Brookings Institution, Washington, DC, USA), Gary Burtless (The Brookings Institution, Washington, DC, USA, corresponding author)
Year2012
Volume40
Issue1
Pages81-105
Publication date2012-03-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueLatin American Politics and Society (JOURNAL)
Journal identifiersISSN: 1531-426X • E-ISSN: 1548-2456
PublisherSAGE Publications Inc (PUBLISHER)
DOI10.1177/0032329211434691
OpenAlexW2039480397
LanguageEN
Citations received6
References cited6

Old-age income protection is provided in wealthy democracies by publicly funded defined-benefit pensions. Budgetary challenges have forced policy makers to consider private alternatives to these traditional systems. I consider the shortcomings of private saving arrangements in duplicating the advantages of public pensions. Some shortcomings can be overcome by introducing compulsory elements into private saving plans. Worker contributions into such plans could be mandatory; some or all worker accumulations in the plans could be converted to annuities at retirement; and workers' investment choices could be narrowly circumscribed. These restrictions do not eliminate the biggest weakness of private saving plans. Fluctuations in asset prices make it hard even for well-informed savers to select an affordable saving rate and an investment strategy that will assure decent income in old age. Public pension systems partly insulate workers against economic and financial market risks by sharing those risks broadly across workers, retirees, and taxpayers in multiple generations

Actuarial science · Asset (computer security · Business · Economics · Investment (military · Labour economics · Pension · Private pension · Public economics · Finance · Financial Literacy, Pension, Retirement Analysis · Global Health Care Issues · Retirement, Disability, and Employment

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