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Comments on Barr’s EVALUATION OF THE FINNISH PENSION SYSTEM

Comments on Barr’s EVALUATION OF THE FINNISH PENSION SYSTEM . Jukka Lassila ETLA 7.1.2013. Individuals and families. Poverty relief: “The risk of poverty is sharply higher for single pensioners”

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Comments on Barr’s EVALUATION OF THE FINNISH PENSION SYSTEM

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  1. Comments on Barr’sEVALUATION OF THE FINNISH PENSION SYSTEM Jukka Lassila ETLA 7.1.2013

  2. Individuals and families • Poverty relief: “The risk of poverty is sharply higher for single pensioners” • Consumption smoothing: “in many countries (e.g. Canada) couples have some leeway over the division of pension capital” ETLA

  3. Strong growth in the proportion living alone

  4. Variations across age groups

  5. What to do • “review … the relative size of the national pension and guarantee pension for single people and couples” • “…consider whether the option to transfer pension capital between partners at divorce or retirement would be desirable.” • “If so, the design of such transfers would require detailed study.” ETLA

  6. Retirement and employers • “Transactions costs: if a worker wants to downshift at his/her existing employer, time is needed to negotiate the deal.” • “legal uncertainties can add to transactions costs, e.g. whether it is legitimate to reduce the wage of a worker who has become less productive” • “It might be useful for the social partners to develop some sample contracts.” ETLA

  7. On retirement • Morechoiceaboutwhen to retire, and whetherfullyorpartially • Benefitadjustment for a delayedstart • Actuariallyfairtreatment of accruedrights • Laterretirement (a must) ETLA

  8. On partialretirement • Morechoiceaboutwhetherto retirefullyorpartially • Benefitadjustment for a delayedstart • Actuariallyfairtreatment of accruedrights • -> goodbye to part-timepensions! ETLA

  9. On laterretirement • “Instead of talking about standard retirement age and later retirement, it would be useful to talk about the earliest eligibility age and normal retirement age” • Normal = 63 + time (N months) needed to compensate for longevityadjustment? • N depends on the agewhen the super-accrualstarts • -> replacesuper-accrual with actuariallyfairtreatment of accruedrights ETLA

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