In every developed country, there has been considerable concern for years about the future viability of public pension systems. This concern is aggravated as a result of the population aging process, which entails a series of important economic consequences that affect, in a special way, government spending.
For a PAYG (pay-as-you-go) public pension scheme to be viable and sustainable, there must be an adequate relationship between the number of contributors and the number of pensioners.
If, as a consequence of the aging of the population, this proportion is markedly unbalanced, that is, there are fewer and fewer working people to support the benefits of a growing number of older people, the pension system may find it difficult to keep the level of benefits.
Hence, in order to keep a standard of living during retirement similar to that enjoyed in the working years, it is necessary to provide for an income that supplements revenues from public pension systems.
This supplement can be constituted through a variety of financial products such as pension plans or some types of insurance that have been created and regulated specifically for this purpose.
