Initial public pensions are indexed to the economy-wide average wages, but pensions in progress are indexed to prices, average wages or their combinations - varying across countries and periods. We create a simple overlapping cohorts framework to study the properties of indexing pensions in...

Studying the age-dimension of the probability distribution of pensions while assuming steadily rising real wages and time-invariant benefit-rules, two factors play important roles: (i) the weight of the wages in indexation of benefits in progress; (ii) the longevity gap. Factor (i) acts against...

We reconsider the problem of indexation of public pensions, emphasizing that similar contribution paths should imply similar benefit paths. This robustness criterion is only satisfied by full wage indexing, which in turn requires the politically unpopular reduction of the accrual rates. To...