Fully funded pension

Updated: Aug 20, 2021

A pension that is financed from accumulated saving. A state-operated fully funded pension scheme will levy a pension tax (in the US, a ‘social security’ contribution) upon each worker. The tax revenue is then invested by the pension scheme. When the worker retires the investment plus accumulated interest is used to finance pension payments. See also pay-as you-go pension.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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