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On the other hand, the latest changes enacted in 2000 were incremental in nature. In addition to the change in indexation rules, the benefit level provided by the Employees’ Pension Insurance scheme was immediately curtailed by 5 percent. A further 10 percent reduction will be phased in over the next twenty years. Also the share of National Pension benefits funded by general tax revenues (rather than earmarked contributions) has increased from zero to about one-third. According to current forecasts, this will do something to limit the expected increase in contribution rates (to about 28 rather than 34 percent) in 2050.

A standard way of representing the sex and age structure of a population at a given point in time is to display the data in the form of a so-called population pyramid. That expression is actually a little outdated. A pyramid—with many young people at the bottom, fewer and fewer people as we go up the age scale—is what one would get if the population had been growing for several decades without ever encountering shocks such as wars, epidemics, or periods of extreme economic hardship or uncertainty.

2 Public Support for the Old Public support for the aged plays an important role in the fiscal systems of virtually all industrialized countries. 1 This prompts two questions. One is why, the other is how. We will deal with the first question in chapter 7. Here we touch briefly on the second. Suppose it has been decided that every person over a certain age should get a pension. One way to implement this decision is to give the state the monopoly of supplying the service. Another is to oblige everyone to buy an annuity from a private institution of their choice (in much the same way as motorists are obliged, in many countries, to buy third-party insurance), and leave it for the tax-benefit system to redistribute consumption from the rich to the poor in the usual way.

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Barbie - Show Time!


by Steven
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