An economic analysis of the PAYG retirement system and the expected consequences from a transition to an FF scheme

摘要

In this paper an attempt is made to illuminate the basic problems that are associated with financing retirement. The currently prevailing, in most developed countries, Pay-As-You-Go (PAYG) system and its deficiencies are analysed initially from a traditional economic perspective and the expected consequences from a transition to a Fully- Funded (FF) scheme are also presented. A System Dynamics model is subsequently described which enables the employment of considerably more realistic assumptions than are commonly employed in economic models, and its results prove to challenge mainstream economic findings. In addition many novel features of PAYG schemes are uncovered.