AGEING WORKING PAPERS Maintaining Prosperity In An Ageing Society: the OECD study on the policy implications of ageing WORKING PAPER AWP 3.8 RETIREMENT INCOME SYSTEMS FOR DIFFERENT ECONOMIC, DEMOGRAPHIC AND POLITICAL ENVIRONMENTS

There is no perfect social security system. All pension systems require good government and good management to function well. All systems must cope with macroeconomic uncertainties--inflation, unemployment, wage growth rate, changes in demographics, and changes in interest rates. While a wide range of social security systems are capable of meeting the goals of society, the following general recommendations apply for most countries. There should be a poverty reduction program, an unfunded social insurance program, a funded program, and private savings. There should be compulsory participation in a unified national pay-as-you-go system without special treatment for favoured groups. If the funded program is mandatory, consideration needs to be given to the problem of fixed costs that are a relatively heavy burden for small accounts.