Collective pension contracts allow for intergenerational risk sharing with the unborn. They therefore imply a higher level of social welfare than individual accounts. Collective pension contracts also imply a sub-optimal allocation of consumption across time periods and states of nature however....

This paper studies the interaction between macro-economic risk and pay-go social security. For this, it uses an applied general equilibrium model with overlapping generations of risk-averse households. The sources of risk are productivity shocks and depreciation shocks. The risk profile of...