When Retirement Becomes Impossible

M01

Two retirement machines

GSX:POP-001:M01 · Model specification · Version 1.0

Connected conditional claims

C01GSX:POP-001:C01In this funded-account model, a worker who starts at 25 on R30,000 a month, contributes 12 percent, and earns a 3 percent net real return exhausts a pension equal to 60 percent of final salary around age 70 if retirement begins at 60 and life lasts to 90.high sensitivity

C02GSX:POP-001:C02Under those same age-60 and age-90 assumptions, the account supports only about 27 percent of final salary for life. It does not support a 60 percent replacement at a 12 percent contribution and a 3 percent real return.high sensitivity

C03GSX:POP-001:C03In the public-pension lens, the required pension-only payroll rate is 18 percent in the short-retirement case, 42 percent in the ageing-squeeze case, and 65 percent in the century-life stress case. Holding fertility at 1.7, coverage at 80 percent, and the benefit at 40 percent with price indexation, a rate at or below 20 percent requires retirement near 71, 75, or 79 as longevity rises from 90 to 100.high sensitivity