Pension Design and the Failed Economics of Squirrels

This paper explores the nature of reciprocity between workers and pensioners, starting from observation that what pensioners consume has mostly to be produced by younger workers, therefore in some form is inherent. The opening section argues a worker can try arrange consumption retirement (a) storing current production or (b) building claims on future production. However, (the squirrels model) does not work well, so main vehicle There are two approaches doing – through promises (which lie at core Pay-As-You-Go (PAYG) plans), accumulating financial assets which exchanged for goods services basis funded plans). second part establishes central element assessing pension arrangements extent investment productive assets. third considers durability different regimes. paper’s conclusions inherent plans, specifics design many ways secondary, (c) really matters economic growth (increasing available share pensioners) good government will manage PAYG pensions responsibly and/or sustain stability regulatory capacity underpin pensions). JEL codes: D63, E21, E22, E24, J14, J18