ABSTRACT
Due to rapid demographic transitions caused by rising life expectancy and declining fertility, many countries around the world are seeking ways to reform their unfunded pay-as-you-go (PAYG) systems of old age social security. Various proposals for reforms have been suggested, the most radical one being to privatize, that is, to replace the PAYG scheme by a funded system in which workers make contributions to private pension funds. In most industrialized countries, however, particularly in Europe, all citizens are entitled to a minimum pension from the government. The question of funding will therefore only pertain to the earnings related part of the PAYG pension scheme.
