Bowden & Lorimer: Ex post flexible state superannuation mechanisms


Many OECD governments are facing fiscal pressures from historically instituted state funded pension schemes. Extending qualifying service, entry points and payment rates, have become common responses, along with a degree of choice on the part of recipients. However flexibility in itself does not solve the problem of regret from locking into a particular variant, because the choice must typically be made prior to a time of rapid change in the informational base as to health and longer term survival assessment. A variant is proposed that would enable recipients to delay a final decision once better information is available. By adjusting the rates as between basic and enhanced rates, the government can engineer better fiscal outcomes with less emotional fallout.

Available for download here.