PENSIONS, FERTILITY AND FAMILIES

Public pay-as-you-go pension systems induce low fertility rates, which in turn contribute to the insolvency of those very systems. They have replaced the old-age security motive for having children, which is a major factor behind fertility in their absence. They also penalise fertility by externalising the contributions of children while leaving the costs of child-bearing unaffected. Fertility rates could be raised by moving towards personal savings schemes or re-linking pension benefits to fertility.