pensionssystem

A pension system, often called pensionssystem in several languages, is the set of laws, institutions, and financial arrangements designed to provide income to people after retirement. It typically comprises public (state), occupational (employer-based), and private (individual) pillars. The exact design varies across countries but the aim is to secure a basic standard of living and manage longevity risk.

Public pension schemes are usually the core component. They are often financed on a pay-as-you-go basis, where current workers fund current retirees, and benefits depend on earnings history and years of contributions. Retirement ages and benefit formulas influence the level and sustainability of benefits.

Occupational pensions are employer-sponsored plans that supplement public pensions. They can be defined-benefit, where benefits are determined by salary and years of service, or defined-contribution, where contributions are invested to fund retirement income. Tax incentives and regulation shape their size and coverage.

Private pensions include personal savings and investment products. They offer additional retirement income and help individuals manage risk and uncertainties, such as market performance and longevity. These schemes can be voluntary and may have tax advantages.

Funding and sustainability considerations: Pay-as-you-go systems require demographic and economic balance to remain affordable; aging populations and lower birth rates pose pressures. Some countries employ mixed models and gradual reforms like raising the retirement age, modifying benefit formulas, or adjusting contribution rates.

Governance and metrics: Pension systems are administered by government agencies or pension funds, with rules on eligibility, investment of assets, and disclosure. Evaluation uses indicators such as replacement rate, adequacy, coverage, and sustainability.

Variation: There is substantial variation among countries, with Nordic systems emphasizing public provision, Anglo-Saxon systems relying more on private provision, and others combining features to balance solidarity and individual responsibility.