Book Review: Pension Systems: Beyond Mandatory Retirement
| Date | 01 December 2006 |
| DOI | 10.1177/138826270600800407 |
| Author | Camila Arza |
| Published date | 01 December 2006 |
| Subject Matter | Book Review |
Book Reviews
408 Intersentia
Elsa Fornero and Paolo Sestino (eds.), Pension Systems: Beyond mandatory
retirement, C heltenham, Edward Elgar, 2005, 288 pp., ISBN 1-84376-947-6
What can policymakers do to make pension systems a ordable when increasing
contribution rates or reducing bene t levels are not longer an option? is book
deals with a nother pol icy intervention, which has been in the policy agenda of ever y
European government and the Eu ropean Commission over the past few years , namely
to increase e ective re tirement ages. i s compilation of essays is t he outcome of the
proceedings of the conference ‘Is ma ndatory retirement an outdated feature of pension
systems?’, held at the Centre for Research on Pensions and Welfare Policies in Turin,
on September 2003, and includes papers from some of the key experts on pension
policy around Europe. e topic addressed is no doubt rather speci c, and the book
is indeed dedicated to a specialised audience, mostly (though not exclusively) made
of researchers with a n economic background working on pension and welfare policy.
But it is this focus around a speci c theme that allows the chapters to better address
the complexity of the problem and study more comprehensively the extent to which
speci c pension design features ca n a ect e ective ret irement ages, and consequently
pension nancing. e contributors to the book evaluate pension policy in di erent
countries and use alternative methodologies, but there is a clear connecting line
among them.
e introductory chapter by Els a Fornero and Paolo Sestino critica lly analyses the
idea of mandatory reti rement, that is, the establ ishment, in the pension system r ules, of
a maximum age at wh ich workers are forced to retire. e authors arg ue that, although
there is a rationale for compulsory participation in pension systems (i.e. myopia) as
well as for the establishment of a minimum retirement age, there seems to be no
rationale for the existence of a ma ximum retirement age. From a policy perspective,
the options are many (as Diamond’s chapter shows) from mandatory reti rement (i.e.
bene t take-up) at a xed age, to an age window, no mandatory retirement age, w ith
or without actuar ial adjustments, with or without the r ight to continue working a er
bene t take-up, and so on. e speci c e ects of each option are likely to be di cult
to eva luate in a ll thei r complexit y, but some ins ights can be obtain ed from eac h of the
chapters in the book.
e book is div ided in two parts: in the rst part, two chapters (the rst by Peter
Diamond, the second by Sarah Bridges and Richard Disney) deal with the broader
issues of pension system design and retirement decisions. e second part is made
of ve single-country studies (two of them on the Italian case), which look at the
patterns and dyna mics of retirement in the institutional contex t of each country.
Diamond explores the alternative design features surrounding mandatory
retirement. His chapter addresses the likely impacts of these design features (e.g.
age-speci c tax rates, the dissociat ion of bene t take -up from ret irement, alternative
indexation rules, windows to take-up bene t s, choices for annuitisat ion) on retirement
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