The Actuarially Appropriate Management of Public Pensions:
Funding or Pay-As-You-Go
Professor and Director of Actuarial Science and Statistics,
Univ. of Witwatersrand, Johannesburg, South Africa.
Funded pension schemes – rather than pay-as-you-go state arrangements
– are consistent with generally accepted accounting and actuarial practices.
The application of such practices offers greater security to members of
pension schemes and allows for greater understanding and control over
government finance and for rational comparisons between alternative
government expenditures and investments. This is illustrated in a South African
context. It is suggested that civil and social pension schemes should best
be managed along these lines by elected boards of trustees independent
Key words: public pensions, accounting, pension reform.