New pension papers from the IMF

Working Paper No. 12/283: A Tradeoff between the Output and Current Account Effects of Pension Reform Author/Editor: Catalan, Mario ; Magud, Nicolas

Summary: We compare the long-term output and current account effects of pension reforms that increase the retirement age with those of reforms that cut pension benefits, conditional on reforms achieving similar fiscal targets. We show the presence of a policy trade-off. Pension reforms that increase the retirement age have a large positive effect on output, but a small (and often negative) effect on the current account. In contrast, reforms that cut pension benefits improve the current account balance but reduce output. Mixed pension reforms, which extend the working life and cut pension benefits, can simultaneously boost output and the current account.
http://www.imf.org/external/pubs/cat/longres.aspx?sk=40133.0

Working Paper No. 12/285: Pension Reforms in Japan Author/Editor: Kashiwase, Kenichiro ; Nozaki, Masahiro ; Tokuoka, Kiichi

Summary: This paper analyzes various reform options for Japan’s public pension in light of large fiscal consolidation needs of the country. The most attractive option is to increase the pension eligibility age in line with high and rising life expectancy. This would have a positive effect on long-run economic growth and would be relatively fair in sharing the burden of fiscal adjustment between younger and older generations. Other attractive options include better targeting by “clawing back” a small portion of pension benefits from wealthy retirees, reducing preferential tax treatment of pension benefit incomes, and collecting contributions from dependent spouses of employees, who are currently eligible for pension benefits even though they make no contributions. These options, if implemented concurrently, could reduce the government annual subsidy and the government deficit by up to 1¼ percent of GDP by 2020.
http://www.imf.org/external/pubs/cat/longres.aspx?sk=40141.0