More transparent institutions can lead to more rational decisions on savings, work, and family.

By reducing subsidies to the pension system, reform can improve public finance.

By lowering labor costs, pension reform can reduce entry barriers to the labor market.

Pension reform can improve social equity by balancing the interests of workers and retirees.

Cons

Pension reform faces political obstacles from the opposition of those due to retire or recently retired.

The strong tendency to make the same choices as in the past ignores condition changes.

Pension system complexity makes it hard to see the need for reform, and to assess its merits.

If reforms involve financial markets, positive as well as negative externalities may arise.

Accounting applied to contributions flowing through pension systems misleads and tempts politicians to hide the real scale of indebtedness.