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This article, based on two books (2008, forthcoming), sets out principles for pension design: pension systems have multiple objectives, analysis should consider the pension system as a whole, analysis should be in a second-best context, different systems share risks differently and have different effects by generation and by gender. The article considers policy implications: there is no single best pension design; earlier retirement does not reduce unemployment; unsustainable pension promises should be addressed directly; adding funding in a PAYG mandatory system may or may not be welfare improving; and implementation matters design should not exceeds a country's capacity to implement.

This paper explores the nature of reciprocity between workers and pensioners, starting from the observation that what pensioners consume has mostly to be produced by younger workers, and therefore reciprocity in some form is inherent. The opening section argues that a worker can try to arrange consumption in retirement by (a) storing current production or (b) building claims on future production. However, storing current production (the squirrels model) does not work well, so that the main vehicle is building claims on future production. There are two approaches to doing so – through promises (which lie at the core of Pay-As-You-Go (PAYG) plans), or by accumulating financial assets which can be exchanged for goods and services (the basis of funded plans). The second part of the paper establishes that a central element in assessing pension arrangements is the extent to which investment is in productive assets. The third part considers the durability of different pension regimes. The paper's central conclusions are (a) that reciprocity is inherent in pension plans, (b) that the specifics of pension design are in many ways secondary, and (c) that what really matters are economic growth (increasing what is available to share between workers and pensioners) and good government (which will manage PAYG pensions responsibly and/or sustain the economic stability and regulatory capacity that underpin funded pensions).

This paper explores the nature of reciprocity between workers and pensioners, starting from the observation that what pensioners consume has mostly to be produced by younger workers, and therefore reciprocity in some form is inherent.The opening section argues that a worker can try to arrange consumption in retirement by (a) storing current production or (b) building claims on future production. However, storing current production (the squirrels model) does not work well, so that the main vehicle is building claims on future production. There are two approaches to doing so – through promises (which lie at the core of Pay-As-You-Go (PAYG) plans), or by accumulating financial assets which can be exchanged for goods and services (the basis of funded plans).The second part of the paper establishes that a central element in assessing pension arrangements is the extent to which investment is in productive assets. The third part considers the durability of different pension regimes.The paper's central conclusions are (a) that reciprocity is inherent in pension plans, (b) that the specifics of pension design are in many ways secondary, and (c) that what really matters are economic growth (increasing what is available to share between workers and pensioners) and good government (which will manage PAYG pensions responsibly and/or sustain the economic stability and regulatory capacity that underpin funded pensions). JEL codes: D63, E21, E22, E24, J14, J18

AbstractThis article argues that reforms of higher education finance for undergraduates in England introduced by the Blair government in 2006 provided a progressive strategy for achieving the central objectives of higher education of quality (better), access (wider) and size (larger). Reforms in 2012 are a not a strategy but a collection of ad hoc arrangements. They include the good (a higher fees cap, a higher interest rate on student loans, better information and improved support for part‐time study), the bad (abolishing most taxpayer support for teaching in the arts and humanities and the social sciences, and raising excessively the threshold at which loan repayments start) and the unspeakable (abolishing Education Maintenance Allowances and AimHigher). The reforms are fiscally costly and hence perpetuate the central problem of capped student numbers, and will not stand the test of time. The concluding section outlines the next White Paper.