War on pensions is over. If you want it

In this paper I present AIPSs, Almost Ideal Pension Systems, which are a new way to design pension systems. AIPSs pre-define their constraints (budget balance) and their policy targets (in the form of five policy parameters), take into account all the relevant demographic and economic (time-varying) variables (current survival, current age structure, current employment rate and labour productivity, etc.) and consistently derive the (time varying) dependent variables of the system (age at retirement, individual and average pension benefits, etc.). While logically stringent and mathematically very simple, AIPSs may nonetheless be difficult to understand, for two main reasons. In part, because they use non-standard notions (e.g. the net labour income of the adult population) and in part because the combination of the policy choices (through the five parameters mentioned above) may result in widely different outputs, apparently with little or nothing in common - and yet all belonging to the same AIPSs family. While accepting AIPSs as the standard of reference in this field off study is, in my view, a necessary first step, several other issues remain open: among them, how to identify the best possible set of the policy choices and how to transition from the current PAYG pension arrangement - whatever it is - to the preferred form of AIPS.