ABSTRACT
This chapter provides some needed clarification on "individual accounts," and outlines the main arguments for individual accounts. High administrative costs of privately managed individual accounts have been criticized and in some cases, there does appear to be ample room for improvement. In the popular pension discussion, "individual accounts" are often used as short hand for funded, privately managed, defined-contribution type pension arrangements. The reason behind the reform deadlock and the possibility to overcome it through individualization plus funding is essentially political. A discussion about individual accounts versus social insurance has recently taken center stage again in the U. S. with the proposals to replace part of the existing unfunded, defined benefit scheme with prefunded, defined contribution accounts. There are many arguments for moving from typical unfunded, government managed and defined benefit scheme toward individual accounts—unfunded and/or funded, publicly and/or fully or partially privately managed.
