ABSTRACT
If the population is ageing, either contribution rates will have to be raised, or pensions will have to be lowered. As the model pension system is designed to provide a certain pension level and adjusts the contribution rate to achieve this level, it can be considered a defined-benefit scheme. The actuarial accounting method has been developed for the new Swedish pension system and is a part of its legislation. The actuarial-accounting method is used to identify and illustrate the factors that bring about a sustainable matching of contribution rates and pension levels. Shifting from an annual to a life-cycle perspective will affect contribution rates. The median "life-cycle contribution rate" for the 41 countries is 23.6 %. The ratio of expected working years to expected retirement years can be seen as the basic determinant of the life-cycle support ratio. The chapter shows that how a life-cycle perspective can be applied to avoid expected variations in contribution rate.
