Abstract for: Towards a better understanding of pension systems

Pension systems are vital components of every economic system. During the last two decades, population aging and financial insufficiencies in many countries forced governments, corporations and private pension schemes to conduct reform to sustain their pension systems. This paper investigates different Pay-as-you-go and funded pension schemes in order to provide a better understanding of the dynamics and the structure behind a pension system. Fully funded and unfunded schemes are modeled in a generic form. Issues of stability, population dependency and redistribution are discussed according to model structure and simulation results. System dynamics provides and efficient tool to understand the nature of each scheme.