The advantage is that such a system is less influenced by demographic trends. On the contrary, since people remain active and productive into old age, they can save longer and, as a result, form a larger pension for themselves.
The drawback is that people with low incomes are not be able to save enough money and find themselves in a highly vulnerable position in retirement. In this case, most likely, only the state will be able to provide them with a decent old age.
The US pension system is combined, pay-as-you-go system. People and their employers make contributions to pension funds. Therefore, the United States of America is famous not only for high wages but also for decent pensions.
Pension payment is tied to the social insurance system, which has been successfully functioning in the United States for many decades. In case of insurance event (reaching a certain age), the state guarantees the person, if the latter meets certain conditions, a monthly lifelong pension payment.
Under the State insurance pension system, the employer and employee pay the corresponding pension contributions from income. These contributions serve as the basis for the formation of a future pension.
Provision within the non-state system. The opening of special accounts is of key importance here, where a citizen has the right to voluntarily transfer money towards a future pension.
The system of pension savings, the essence of which is that an organization (both public and private) accepts on its account a part of the employee's pension contribution (with his consent), and in the future these amounts multiplied, serve as an additional payment to the general state pension.
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