The Effects of a Fully Funded Pension System on Individual Savings Behaviour

  • Christina Öling


The theoretical and empirical debate about the economic effects of social security and especially pension systems on savings is an unresolved analytical issue in economics. This paper examines the difficulties of theoretically predicting changes in private savings as a result of introducing a fully funded pension system. In order to be able to make any prediction it is necessary to know the behavioural patterns of the individuals in the economy. Since these are difficult to know, it is usual to proceed by assuming that all individuals are alike and behave rationally, and that capital markets adjust supply and demand to an equilibrium where the interest rate clears the markets.


Social Security Pension Fund Real Interest Rate Pension System Social Security System 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Aaron, H., 1966. “The Social Insurance Paradox”. Canadian Journal of Economics and Political Science.Google Scholar
  2. Azariadis, C., 1993. Intertemporal Macroeconomics. Blackwell, Oxford.Google Scholar
  3. Diamond, P., 1965. “National Debt in a Neoclassical Growth Model”. American Economic Review.Google Scholar
  4. Feldstein, M.., 1974. “Social Security, Induced Retirement, and Aggregate Capital Accumulation”. Journal of Political Economy.Google Scholar
  5. Gale, W.G., Scholz, J.K, 1994. “IRAs and Household Saving”. American Economic Review.Google Scholar
  6. Samuelson, P.A., 1958. “An Exact Consumption-Loan Model of Interest With or Without the Social Contrivance of Money”. Journal of Political Economy.Google Scholar
  7. Samuelson, P.A., 1975. “Optimal Social Security in a Life-Cycle Growth Model”. International Economic Review.Google Scholar
  8. Vilmunen, J., Virén, M., 1991. “Saving and Indebtedness Among Different Age Groups in Finland”. Bank of Finland Bulletin. Vol. 65, No. 4. Helsinki.Google Scholar

Copyright information

© Springer Science+Business Media New York 2000

Authors and Affiliations

  • Christina Öling
    • 1
  1. 1.Centre for the Economics of Social SecurityÅbo Akademi UniversityFinland

Personalised recommendations