PUBLIC PENSION SYSTEM SUSTAINABILITY

Since many years the pensions debate has played a fundamental role in the political program of many countries of the world. The public PAYG pension schemes have faced a crisis due from one hand to the aging population for which the pension must be paid for a long time, and from the other hand the stoppage in economic growth has slowed down the flow of contribution revenue. In this work it is analyzed the sustainability of a PAYG pension scheme, after the introduction of a funded component to balance the PAYG part when the ratio between contributors and pensioners is decreasing. Risk indicators are presented to assess the sustainability of the scheme. The aim is to find the optimal share of the funding component, in order to maximize the sustainability indicators.