The Distribution Phase of an Individual Accounts Reform of Social Security

Research Report

The Distribution Phase of an Individual Accounts Reform of Social Security

The Potential Role for Private Sector Annuities
March 19, 2002

Abstract

The debate over the merits of an individual accounts reform, focused hitherto on the accumulation phase of the pension cycle, needs to discuss the need for restrictions on withdrawals from individual accounts, and in particular their partial or complete annuitization. The policies that might govern withdrawals range from complete or near-complete laissez-faire to the compulsory annuitization of all of the funds in the form of a life annuity supplied by the government. The aim of this paper is to identify and analyze the basic questions that must be resolved to formulate a well worked-out policy for the distribution phase of an IA reform, assuming that such a reform is implemented.

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