Social Security and Pensions: Introduction to Retirement Institutions
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Questions and Answers

What is the main purpose of retirement institutions from an individual perspective?

  • Consumption smoothing (correct)
  • Encouraging impulsive spending
  • Facilitating high-risk investments
  • Promoting excessive savings

    • What is the main challenge associated with the occupational pension scheme?

  • Insufficient government funding
  • Decreasing life expectancy
  • Low participation rate
  • Aging population and rising dependency ratio (correct)

    • What is the primary source of funding for private pensions?

  • Social security taxes
  • Employer contributions
  • Personal savings and investment returns (correct)
  • Government subsidies

    • What is the suggested solution for the main problem associated with private pensions in the 21st century?

    <p>Working longer and/or more savings</p> Signup and view all the answers

    Should we substitute paygo and funding?

    <p>Yes, to promote individual responsibility</p> Signup and view all the answers

    What is the primary aim of pension systems in most countries?

    <p>To deliver a pension equal to 70% of the average income after retirement</p> Signup and view all the answers

    What is an advantage of a combination of PAYG (Pay-As-You-Go) and funding in pension systems?

    <p>Risk diversification by spreading risks across different sources</p> Signup and view all the answers

    What is the main impact of demographic risks associated with PAYG systems?

    <p>A decrease in the sustainability of the pension system</p> Signup and view all the answers

    Which countries have a high percentage of public pension and low total pension assets/GDP ratio?

    <p>Italy and Spain</p> Signup and view all the answers

    What influenced the establishment of most universal mandatory pensions in developed countries during the late 1930s to early 1950s?

    <p>Political preferences and historical events</p> Signup and view all the answers

    What is the primary purpose of retirement institutions from an individual perspective?

    <p>Consumption smoothing</p> Signup and view all the answers

    What is the main problem associated with the occupational pension scheme?

    <p>Low rate of capital market return</p> Signup and view all the answers

    Which type of pension scheme is residence-based and funded via paygo (government contributions)?

    <p>State pension (public pension)</p> Signup and view all the answers

    What is the suggested solution for the main problem associated with private pensions in the 21st century?

    <p>More savings</p> Signup and view all the answers

    What is the primary source of funding for private pensions?

    <p>Personal savings and investment returns</p> Signup and view all the answers

    What is the main aim of pension systems from a government's perspective?

    <p>Income redistribution</p> Signup and view all the answers

    What is the primary purpose of pension systems in most countries?

    <p>To deliver a pension equal to 70% of average income before retirement</p> Signup and view all the answers

    What is the primary advantage of a combination of PAYG and funding in pension systems?

    <p>Risk diversification</p> Signup and view all the answers

    What is the main challenge associated with the occupational pension scheme?

    <p>Financial market risks</p> Signup and view all the answers

    What is the primary aim of pension systems from a government's perspective?

    <p>To ensure the sustainability of the system</p> Signup and view all the answers

    What influenced the establishment of most universal mandatory pensions in developed countries during the late 1930s to early 1950s?

    <p>Hyperinflation and the Great Depression of the 1930s</p> Signup and view all the answers

    What is the main impact of demographic risks associated with PAYG systems?

    <p>Increase in dependency ratio</p> Signup and view all the answers

    What is an advantage of collective savings plans in mitigating financial market risks?

    <p>Risk-sharing strategies</p> Signup and view all the answers

    What is the potential impact of inflation on pension savings?

    <p>Erosion of the real value of pension savings</p> Signup and view all the answers

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