What is the scope for a fruitful co-existence of the public and the private in the payout phase of the pension system? - Selected theoretical arguments and lessons from CEE countries
Abstract
In European countries, a rich patchwork of old-age pensions exists. In virtually every country, there is a unique combination of public and private schemes.
What functions should the private complement to obligatory public old-age pensions fulfil? Should it be obliged to provide longevity insurance? Under what conditions, should a phased withdrawal be considered? Can in some cases the drawdown of a lump-sum upon retirement be the most economical option? In the theoretical part, I follow a fruitful strand of literature on the optimal setting of the decumulation phase (payout phase) initiated by J. R.
Brown (2007) that has been recently been enriched e.g. with contributions by P. Nolan (2014) and J.
M. Poterba (2014).
In the empirical part, I look into the recent pension reforms in the Czech Republic and Slovakia and evaluate different reform options taken and considered. Finally, I analyze the relative bargaining power of the public sector and the private sector in the most recent re-negotiations of the Czech pension reform in 2014-2015.
References: Brown, J. R. (2007).
Rational and behavioral perspectives on the role of annuities in retirement planning (No. w13537). National Bureau of Economic Research.
Nolan, P. (2014). Reform of the UK's decumulation market-background note for decumulating retirement savings forum.
Poterba, J. M. (2014).
Retirement Security in an Aging Population. The American Economic Review, 104(5), 1-30.