Article in Journal
Actuarially accurate benefit reductions for early retirement
Martin Werding
ifo Institut für Wirtschaftsforschung, München, 2007
ifo Schnelldienst, 2007, 60, Nr. 16, 19-32
ifo Institut für Wirtschaftsforschung, München, 2007
ifo Schnelldienst, 2007, 60, Nr. 16, 19-32
Those who take early retirement receive lower retirement benefits. There are different ways of setting actuarially correct reductions, depending on the in-tended goals. The relatively low current reductions in the German system are designed to be revenue neutral for the pension system. This article shows that there is only one concept of revenue neutrality and that the current reductions are too low. The decision to take early retirement can only be revenue neutral for the system if the reductions are adjusted to the correct actuarial amount.
JEL Classification: H550,J260
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Journal (Complete Issue)
ifo Schnelldienst 16/2007
ifo Institut für Wirtschaftsforschung, München, 2007