Abstract
Women live longer than men but have lower earnings. We study the design of pension benefit rules for male and female workers. Pension benefits, net of contributions, depend on the retirement age which individuals choose given the benefit rule. The optimal pension scheme adheres to two principles: the one of solidarity, implying redistribution between individuals with different earnings and with different lifespans; and the one of gender neutrality, prohibiting gender discrimination.
Individuals can be single or live in couples. Couples pool their incomes and equalize spouses’ per-period consumption. Social welfare is utilitarian but the sum is taken over an increasing concave transformation of individuals' instantaneous utilities in order to introduce the concern for redistribution. We first investigate the direction of implicit redistribution between men and women. We then study the welfare cost imposed by gender neutrality.