Rethinking Pension Reform

Franco Modigliani, Institute Professor Emeritus and Senior Lecturer in Economics, Finance, and Accounting at MIT, received the Nobel Memorial Prize in Economic Science in 1985 for his pioneering work in analyzing the functioning of financial markets and the behavior of household savers. Much of his writing since that time has been devoted to issues relating to social security, capital markets, money supply, the Euro, and unemployment. He is the author, editor or coeditor of numerous books, including The Debate over Stabilization Policy (Cambridge, 1986) and the autobiographical Adventures of an Economist. Professor Modigliani's professional papers were collected in five volumes and published between 1980 and 1989. Arun Muralidhar is Managing Director of FX Concepts, Inc. a private financial analysis firm. Prior to holding that position Dr Muralidhar served as Head of Research in the Investment Department and a member of the Investment Committee of the World Bank in Washington, DC and subsequently served as Managing Director and Head of Currency Research at J. P. Morgan Investment Management. He is the author of Innovations in Pension Fund Management (2003) and articles in leading journals in finance, including the Journal of Portfolio Management, the Financial Analysts Journal, the Journal of Risk, Derivatives Quarterly, and the Journal of Asset Management. He received his PhD in 1992 from MIT where he studied under Professor Modigliani.

• 1. A primer on pension reform issues; 2. A taxonomy of pension reform issues; 3. Evaluation of pension reforms; 4. Welfare costs defined contribution schemes; 5. The transition from PAYGO to funding with a common portfolio: application to the United States; 6. Social security reform in Spain; 7. The 'two pension fund' theorem; 8. The case for mixed systems and variable contributions: improving the performance of pension systems.

'… the book is an exemplary model for policy analysis in which the crisis is diagnosed and solutions proposed, tested and related institutions recommended. This is surely a wonderful testament to Modigliani's long career as an economist and Muralidhar's hard work in realising his vision.' Gordon L. Clark, Investment & Pensions Europe