A Review of Pension System Reform: An In-Depth Analysis on Related Theories

Abstract

The literature on pension reform is increasingly growing examining different aspects of pension matters including but not limited to the nature, types of classifications, effects, challenges and prospects of pension reforms. The importance of pension reforms is credited to its potential to guarantee a sustainable pension scheme that provides with a decent life to pensioners and their dependents. This research gives a detailed analysis on pension reform theories such as economic theory, multi-pillar model by the World Bank, theory of utility and preferences and life cycle theories. It further discusses the three retirement decision models: two-thirds retirement decision model, the option value retirement decision model and one-year retirement decision model used in explaining various decisions relating to retirement and also the forms of retirement benefits payments. Finally, it discusses the four approaches by which pension reforms can be analyzed.

Key words: pension reform, retirement decisions, pensioner benefits, pension system