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Original scientific paper

Rethinking the Contribution-Benefit Linkage in Pay-As-You-Go Retirement Systems Based on Algerian Case

Farid Flici orcid id ; Research Center in Applied Economics for Development - CREAD, Algeria

Full text: english pdf 2.458 Kb

page 281-294

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Full text: croatian pdf 2.458 Kb

page 295-295

downloads: 75



In Pay-As-You-Go systems, retirement benefits result from the multiplication of the reference wage by the contribution duration by an annuity rate. This formulation can undergo some adjustments to ensure sustainability within a changing environment. In this paper, we showed that the current contribution-benefit linkage might generate a large gap between individuals in terms of profitability and thus in terms of wealth accumulation over long periods. Considering the possible career scenarios in the Algerian retirement system, we found that return rates vary from 9.6% to 13.2%. To reduce inequality, we propose a new retirement benefit formula partially based on the actuarial fairness principle.


retirement; PAYG; equality; IRR; scenario; Algeria

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Article data in other languages: croatian

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