Focus on the Pension System

The present value of the future, or individual decisions behind superannuation investments

Tibor Tatay
PhD, Assistant Professor, University of West Hungary, Sopron

Attila Farmasi
Managing Director, Saint Germain Hongrie Kft., Budapest
Published in: Public Finance Quarterly 2011/2 (p. 169-178.)

Summary: In recent decades, there has been much debate on how a state can establish a pension system that takes into consideration the balance of the general government. In addition to the condition of an equilibrium, social security and the stability of the value of pensions should also be ensured. The Hungarian regulation, however, has compelled not only economic politicians, but also future pensioners make their choice several times. The aim of this paper is to study such choices and decisions. The authors demonstrate the effect mechanism of individual decisions through examples. They believe that decision-makers often do not consider the effect of their choices, and therefore the rightness of their steps is questionable.

Keywords: pension system, portfolio choice, PAYG (pay-as-you-go) and PAYE (pay-as-you-earn) systems

Journal of Economic Literature (JEL) kód: J26, G00


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