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PUBLIC SECTOR PLANS (Risk-sharing Caracteristics : (2) Funded deficit…
PUBLIC SECTOR PLANS
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Challenge
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For public Sector
1) Benefit security
2) Affordability - reasonable level of cost
3) Intergenerational equity - fair distribution of costs across generations
4) Cost stability and sustainability - without compromising benefit security
Intergenerational equity
Stakeholders concerns
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Advocates of other public services
1) will argue that accrued benefits will only be paid at retirement
2) Taxpayers may not want to fully fund pension benefits at the cost of other public services - may shift costs tu future tax payers
Government budget office
1) Will want to keep stable cost budget over time
2) will focus on reducing benefits when funding short fall
may decide to focus on younger EE cuts than older
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