Abstract
Most countries do provide retirement pension schemes within the framework of Pay As You Go pensions. This system however encounters today some unprecedented drawbacks, mainly due to the burden of an ageing population. The future of the retirement system is a real economic concern, not simply a financial one, which needs to be addressed, if the demographic shock is not to mean an inflationary shock. Financial markets know indeed how to transfer in due course nominal debts, but are unable to address real ones. In that regard, shortages in the working population and unemployed with huge nominal debts may induce inflationary bubbles. The funding system may thus be questioned, the risks for holders of nominal assets being unrivalled. Reforms are then to be implemented (I). To shore up this reeling system, pension funds, whose growing popularity cannot be argued, are hailed as the perfect option to address the current failures of Pay As you go pension system. Though, dashing hopes that pension funds are the most efficient way to overcome those failures may be in tatters (II).
