ESRI Studies Series on Ageing
Edited by Toshiaki Tachibanaki
Chapter 7: Retirement provision: accumulations, security, and insurance
John Piggott, Sachi Purcal and Matthew Williams 1. INTRODUCTION Throughout the twentieth century, governments increasingly have taken responsibility for ﬁnancial provision of the elderly. At the end of the century, however, a steady retreat from this position can be observed throughout the world. Population ageing, combined with electoral pressure for smaller government, has led to lower beneﬁt entitlements for those relying on publicly funded social security; this is sometimes accompanied by calls for mandated retirement ﬁnancing to (at least partly) replace public provision. Retirement provision is an active policy issue in almost every developed country, and in many cases, reforms have already been enacted. Some of these are parametric, involving changes to the parameters of traditional social security systems: increases in contribution rates, beneﬁt cuts, changes in the retirement age, or in survivorship provisions. Others, however, involve structural reform. Structural reform, as the name implies, involves more fundamental policy change, for example, the privatization of social security (debated, but not enacted, in the United States), or the development of a mandated employer or employee contribution to a pension fund, as in Australia and Chile. The UK reforms might be seen as combining elements of both. The United States, while ﬁghting shy of structural reform of social security, has nevertheless moved to encourage greater private participation in retirement ﬁnancing through tax concessions to 401(k) pension plans, which are essentially deﬁned contribution (DC) partially preserved retirement saving plans. The advent of 401(k)s has dramatically changed the...
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