Although both are to provide an annuity when you stop the occupation, funded pension and retirement division be differentiated clearly.
What is the operation of the funded pension, and how does it differ from the PAYG?
The principle of funded pension is simple: the accumulation of payments that eventually form capital eligible for the payment of an annuity. The maker of a contract funded retirement may be an individual, community or business.
The funded pension is a kind of accumulated savings by a generation for its own account. The PAYG is exactly the opposite of this principle, since it is always the next generation which contributes to the previous one. Both types of pensions are generally used complementarily : mandatory pension contributions operate essentially on the principle of PAYGO pension, while the complementary pension out individually can be modeled on the pension.
In France, funded pension is mainly associated with the retirement savings . But the phenomenon of baby boomers has somewhat challenged this principle. In fact, children born just after World War are now reaching the retirement age: more than the next generation, they induce contributions logically heavier for the latter. A mixed system combining funded pension and PAYG could avoid the intergenerational inequities of this type.
0 comments:
Post a Comment