The current age pension system in Australia is best described as a pay-as-you-go system (PAYG). An alternative system is a fully funded social security system. The compulsory super contributions by employers for employees are now at 9.5% of wages.
a. Explain the two systems. And what happens to Australian output per worker and the growth of output per worker in the long run if the current age pension system is shifting to the fully funded social security system?
b. Explain whether Australia’s superannuation scheme is like a shift towards a fully funded system. What motivates the Australian government to make such a move?
c. The compulsory super contribution is scheduled to reach 12% in 2025, increasing by 0.5% in each of the next five years. Do you think this is a good idea? Why or why not?

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A payasyougo pension plan is a particular kind of pension conspire where the advantages are straight... View the full answer