Given the Ageing of the Population How Can Countries Afford Pay-As-You-Go Social Insurance Pensions?

The paper examines formation and sustainability of Pay-As-You-Go pension systems within the consequences of the ageing of population. Parametric reforms rather than institutional transformation of Pay-As-You-Go systems into funded pension schemes are advocated. Following the modern theories of family economics and contrary to the mainstream works on the issue, reciprocal causation between pension systems and ageing is stressed. The paper concludes that the World Bank’s first pillar adjustment for maintaining the Pay-As-YouGo schemes achieves its objectives only if it is focused on all elements of the Pay-As-You-Go system.