Political election on legal retirement age (Q2460086)

This article studies a model of the outcome of a majority voting process on the retirement age in a pay-as-you-go pension system. The article begins with a short introduction and an overview of the literature. This is followed, in section 2, with a presentation of the model which consists of a constant population model with a uniform distribution of wages and ages and a pay-as-you-go pension contribution system. Under the assumption of a stationary and temporally independent utility function, the authors derive the equations describing the pattern of wealth accumulation for each individual according to age and wage. In the third section, the authors investigate the preferred retirement age for the different individuals in the model. Several theorems and propositions are presented, with proof, together with charts showing the optimal legal retirement ages for the working population. In sections 4 and 5, the authors further investigate the voting process and the impact on the model of a change in the redistribution level of the system. The article concludes with a useful discussion and a list of relevant references.