The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd


  • Zvi Bodie
Reference work entry


Pensions are benefit contracts that replace a person’s earnings after she reaches old age and retires from the labour force. Pension systems vary widely across countries, but everywhere the government’s role is to provide a minimum through a mix of cash and medical benefits. Governments often provide tax incentives for employers and unions to sponsor occupational pension plans that complement the government-run system. The nature of the pension benefits promised and the assets that back them have profound effects on social welfare, on the development of a country’s domestic asset markets, and on the global financial system.


Adverse selection Annuities Defined-benefit pension plans Defined-contribution pension plans Equipment trusts Free-rider problem Funding of pensions Informational inefficiencies Life-cycle saving model Longevity insurance Moral hazard Occupational pensions Pay-as-you-go pension plans Pensions Retirement Risk sharing Social Security (USA) 

JEL Classifications

This is a preview of subscription content, log in to check access.


  1. Black, F. 1980. The tax consequences of long-run pension policy. Financial Analysts Journal 36: 25–31.Google Scholar
  2. Bodie, Z. 1990. Pensions as retirement income insurance. Journal of Economic Literature 28: 28–49.Google Scholar
  3. Bodie, Z., and E. Davis, eds. 2000. The foundations of pension finance. Cheltenham: Edward Elgar.Google Scholar
  4. Bodie, Z., and R. Merton. 1993. Pension benefit guarantees in the United States: A functional analysis. In The future of pensions in the United States, ed. R. Schmitt. Philadelphia: University of Pennsylvania Press.Google Scholar
  5. Merton, R. 1983. On consumption indexed public pension plans. In Financial aspects of U.S. pension system, ed. Z. Bodie and J. Shoven. Chicago: University of Chicago Press.Google Scholar
  6. Tepper, I. 1981. Taxation and corporate pension policy. Journal of Finance 36: 1–13.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Zvi Bodie
    • 1
  1. 1.