Bowden & Lorimer: Ex post flexible state superannuation mechanisms

ABSTRACT:

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.

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