Individual choice of pension arrangement as a pension reform strategy

The paper examines social security (public pension) reforms in which the programme is partially shifted from a public unfunded basis to a private, prefunded, basis. It focuses on reforms where individuals have a choice in switching from public funded to private unfunded programmes (as in the ѣontracting outҍ scheme in the UK), or where some individuals are forced to join the funded scheme, or reforms which combine both these options. The welfare consequences of such reform strategies are analysed both from an individual and a macroeconomic perspective. The paper also examines whether individuals respond Ѳationally' to the incentives inherent in such programmes.