The Inherent Faults of the State Pension System and the Main Direction of its Improvement

Banyár, József (2019) The Inherent Faults of the State Pension System and the Main Direction of its Improvement. Public Finance Quarterly, 64 (4). pp. 511-525. DOI

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In my study, I took into account the design faults of the state-funded, pay-as-you-go system and realised that its principle (created in arrears) is defective, and it is necessary to move to a new operating principle to correct it. We have to forget about the existing so-called ‘unfunded’ pension system, and the state pension system shall be explicitly placed on its real basis, human capital. This results in an automatic asset/liability matching that is currently totally missing, and we can forget about the usual debates about the sustainability of the pension system. The result of such a system would probably be an increase in the number of births compared to today, but this is not the purpose of the proposed reform, which I intend to elaborate in a separate study, i.e. how this can be put into practice.

Item Type:Article
Uncontrolled Keywords:pay-as-you-go pension system, human capital, funded pension system, pension reform
JEL classification:H55 - Social Security and Public Pensions
I11 - Analysis of Health Care Markets
I18 - Health: Government Policy; Regulation; Public Health
Social welfare, insurance, health care
ID Code:4368
Deposited By: Ádám Hoffmann
Deposited On:19 Dec 2019 16:07
Last Modified:19 Dec 2019 16:07

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