reflections on contributory and non-contributory pensions

I have prepared, for the record, an annotated version of my June 2000 paper “Three Pillars of Pensions? A Proposal to End Mandatory Contributions”. The prologue that follows explains in some detail what I did, and why. This will not be of general interest, but the writing of this paper marked an important moment in my own life, the beginning of my obsession with reform of old age pensions. (That is not a politically correct statement. I should have written ‘pensions for older persons’. But I have never been known for political correctness!)

Without more ado, here is the prologue that I wrote today. The newly annotated paper can be downloaded at the link above.

 

This is an old, but important paper, one that defined my future work on pension reform. In April of the year 2000, I was at an OECD conference in Prague, listening to presentations of two World Bank economists (Estelle James and Dimitri Vittas). At that moment, it suddenly dawned on me that an ideal pension system should provide basic pensions for everyone, funded pay-as-you-go from general government revenue, allowing citizens who desire more than basic income in retirement to save in any way they please, without subsidies, tax breaks or coercion from government. This was my ‘Eureka’ moment.

When it was my turn to speak, the very next day, I spoke with excitement and enthusiasm. The conference was on private pensions, so the audience did not react warmly to my talk. Nonetheless, I presented my core ideas orally, and drafted a paper immediately after the conference. I circulated it as a UNDESA discussion paper in June 2000. While writing the paper, I discovered that the ideal system I dreamed of was already in place — in New Zealand. Much later I discovered that Mauritius for decades has operated a similar pension system. The universal pensions of New Zealand and Mauritius began long ago, are very successful, but nonetheless have been ignored by the OECD, the World Bank and other development agencies.

The OECD published a version of my paper “edited for length” in 2001 on pp. 385-397 of its “Private Pensions Conference 2000” proceedings. The editors changed the subtitle from

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