Uncertain Lifetimes, Pensions and Individual Savings”, in Pensions and Retirement in the United States, edited by Zvi

Attempts to measure the impacts of pensions on household saving have occupied much of the literature in empirical public finance over the past decade. The emphasis here is on the annuity insurance aspects of social security and pensions A simple life—cycle model is put forth to show that even an actuarially fair, fully funded social security system can reduce individual saving by more than the tax paid. Hence, previous partial equilibrium estimates of the impact of social security on saving drawn solely from consideration of the intergenerational wealth transfer at the introduction of the system are, if anything too small. The large partial equilibrium effects are mitigated when initial endowments are considered. To the extent that the introduction of social security reduces the size of unplanned bequests, its net effect on the con-sumption of subsequent generations is diminished. The final sections of the paper extend the approach to private pen