Health, longevity and retirement reform

Social Security Reform with Heterogeneous Mortality

“…To achieve budget balance, we proportionally decrease the current benefit formula until we match aggregate benefits for our benchmark economy. Li (2018) and Laun et al (2019) show that such an adjustment, as opposed to shifting the benefit schedule rightward in the claiming age, is more efficient. 21 In any event, a proportional adjustment is in keeping with our practice of fixing Social Security's total expenditures.…”

“…While it has been long recognized that heterogeneous mortality affects the lifetime progressivity of Social Security (Aaron 1977), and multiple studies have sought to quantify this effect (recent analyses include Goda et al 2011;Bosworth and Burke 2014; National Academies of Sciences, Engineering, and Medicine 2015; and Sheshinski and Caliendo 2018), there has been relatively little progress in quantifying its implications for optimal policies. Laun et al (2019) and Sánchez-Romero et al (2019) consider how to maintain fiscal sustainability in the presence of heterogeneous demographic change. (Also see Conesa et al 2019.…”

The Impact of Reducing the Pension Generosity on Inequality and Schooling

“…Several papers have recently analyzed the redistributive effects of pension systems when longevity varies across socioeconomic groups both empirically (Academies and of Sciences, Engineering, and Medicine 2015; Haan et al 2019;Holzmann et al 2019) and theoretically (Pestieau and Ponthiere 2016;Laun et al 2019;Sanchez-Romero et al 2019). The main conclusion from the empirical literature is that pension systems are becoming increasingly regressive due to the increase in the longevity gap across socioeconomic groups.…”

“…For instance, based on the case study of Norway, Laun et al (2019) find that, when individuals differ by education, health and income, proportionally reducing old-age and disability benefits is preferable to other alternative policies such as raising the early retirement age or increasing social contributions; since raising the retirement age will be avoided by claiming disability benefits. However, the former policy increases inequality across socioeconomic groups.…”

Longevity Adjustment of Retirement Age and Intragenerational Inequality

“…In a recent paper, Laun et al. (2019) study possible retirement reforms in Norway intended to achieve solvency of social security in the face of population ageing taking into account both efficiency and equity across education groups. They find that proportionally lowering old‐age retirement benefits as well as disability benefits maximizes average welfare of all education groups although it generates inequality in that recipients of disability benefits are more adversely affected.…”