The system's stability and financial sustainability are some of the key preconditions for successful operation of the state and satisfaction of its citizens.
The summary of the pension system taxonomy is based on a study by (Gál, Horváth, Orbán, & Dekkers, 2009),[2] see also (Deloitte, 2011).
[2] This type of model is based on up-to-date cross-sectional information regarding the labour activity and social security contributions by various social groups (cohorts) that can be further broken down by gender, position in the labour market and demographic characteristics (such as family status and achieved level of education).
The input information is made up of averages within certain population groups, i.e. the model is based on aggregate data for the cohort concerned which are then further broken down by pension type and benefit.
This model is suitable for the evaluation of incentives regarding e.g. later retirement, for the exploration of the actuarial neutrality of the pension system, etc.
The key outputs are the replacement ratio plus, as the case may be, other micro-financial criteria (implicit tax, comparison of lifelong contributions and benefits, etc.).