Why the Increase in the Retirement Age Will Lead to More Inequality and Poverty? An Ignored Fairness Problem

Authors

  • Peter J. Stauvermann Changwon National University, Deptment of Business & Economics, Changwon, Republic of Korea
  • Ronald R. Kumar The University of the South Pacific, School of Accounting and Finance, Suva, Fiji
  • Arvind Patel The University of the South Pacific, Faculty of Business and Economics, Suva, Fiji

DOI:

https://doi.org/10.2298/PAN190531004S

Keywords:

Bismarckian pensions, Beveridgean pensions, life span, retirement age

Abstract

In this study, we show with the help of a simple model that an increase of the retirement age has a negative impact on the distribution of pension benefits in the Bismarckian as well in the Beveridgean pension system. In both systems, the distribution of pension benefits will change in favour of high-income earners. Additionally, we show that the increasing gap in the life expectancies of low and high-income earners will increase inequality. Both results are a consequence of the positive relationship between the socio-economic status and life expectancy of a person. These important insights are often ignored by the promoters of pension reforms.

Keywords: Bismarckian pensions, Beveridgean pensions, Life span, Retirement age.

JEL: H55, D31.

 

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Author Biographies

Ronald R. Kumar, The University of the South Pacific, School of Accounting and Finance, Suva, Fiji

Associate Professor, School of Accounting and Finance

Arvind Patel, The University of the South Pacific, Faculty of Business and Economics, Suva, Fiji

Head of School and Professor, School of Accounting and Finance

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Published

2022-02-19

How to Cite

Stauvermann, P. J., Kumar, R. R., & Patel, A. (2022). Why the Increase in the Retirement Age Will Lead to More Inequality and Poverty? An Ignored Fairness Problem. Panoeconomicus, 1–21. https://doi.org/10.2298/PAN190531004S

Issue

Section

Original scientific paper