ABSTRACT
The economic cost of supporting the retired population is measured in terms of the goods and services that they consume. This chapter focuses on the cost as viewed from the perspective, that of the economy. It examines the factors that determine the aggregate amount of resources that will be used in any given year to support the retired, and shows how that aggregate can be changed. The chapter looks at the potential impacts of shifting from public sector, pay-as-you-go approaches to private sector, advance funded approaches. Sponsors of the reforms also believe that the new approaches create institutional arrangements which will prove substantially more effective in preventing unsustainable expansions in future benefits than the public sector arrangements they replaced. A common element in debates over pension policy is the interest in institutional changes that might increase the rate of growth of the total income available for supporting the retired.
