PUBLIC FINANCE

public finance

2. Several countries globally have unfunded (PAYG) pension systems. Meanwhile some studies have shown that the ratio of Population Aged above 65 to Population Aged 15- 64 keeps increasing and that PAYG contribution rates required to cover any particular level of pension benefits have reached unsustainably high levels thus placing serious financial strain on the public pension systems in terms of ability to pay pension benefits in the future. Required a) Guided by the principles behind the operation its operation and an appropriate model or equation which expresses conditions for maintaining financial balance in unfunded pension systems such that the contributions paid by current workers are set at a level sufficient to cover contemporaneous pension expenditure; analyse the effect of decline in number of workers and aging population number involving increasing number of pensioners on sustainability of unfunded pension schemes. [10 marks) b) Outline some key policy responses to address the aging population problem so it will be able to continue to pay benefits into the indefinite future. [6 marks] 2. Several countries globally have unfunded (PAYG) pension systems. Meanwhile some studies have shown that the ratio of Population Aged above 65 to Population Aged 15- 64 keeps increasing and that PAYG contribution rates required to cover any particular level of pension benefits have reached unsustainably high levels thus placing serious financial strain on the public pension systems in terms of ability to pay pension benefits in the future. Required a) Guided by the principles behind the operation its operation and an appropriate model or equation which expresses conditions for maintaining financial balance in unfunded pension systems such that the contributions paid by current workers are set at a level sufficient to cover contemporaneous pension expenditure; analyse the effect of decline in number of workers and aging population number involving increasing number of pensioners on sustainability of unfunded pension schemes. [10 marks b) Outline some key policy responses to address the aging population problem so it will be able to continue to pay benefits into the indefinite future. 16 marks) 2. Several countries globally have unfunded (PAYG) pension systems. Meanwhile some studies have shown that the ratio of Population Aged above 65 to Population Aged 15- 64 keeps increasing and that PAYG contribution rates required to cover any particular level of pension benefits have reached unsustainably high levels thus placing serious financial strain on the public pension systems in terms of ability to pay pension benefits in the future. Required a) Guided by the principles behind the operation its operation and an appropriate model or equation which expresses conditions for maintaining financial balance in unfunded pension systems such that the contributions paid by current workers are set at a level sufficient to cover contemporaneous pension expenditure; analyse the effect of decline in number of workers and aging population number involving increasing number of pensioners on sustainability of unfunded pension schemes. [10 marks) b) Outline some key policy responses to address the aging population problem so it will be able to continue to pay benefits into the indefinite future. [6 marks] 2. Several countries globally have unfunded (PAYG) pension systems. Meanwhile some studies have shown that the ratio of Population Aged above 65 to Population Aged 15- 64 keeps increasing and that PAYG contribution rates required to cover any particular level of pension benefits have reached unsustainably high levels thus placing serious financial strain on the public pension systems in terms of ability to pay pension benefits in the future. Required a) Guided by the principles behind the operation its operation and an appropriate model or equation which expresses conditions for maintaining financial balance in unfunded pension systems such that the contributions paid by current workers are set at a level sufficient to cover contemporaneous pension expenditure; analyse the effect of decline in number of workers and aging population number involving increasing number of pensioners on sustainability of unfunded pension schemes. [10 marks b) Outline some key policy responses to address the aging population problem so it will be able to continue to pay benefits into the indefinite future. 16 marks)