31

|Scenario 12. Starting the funded tier w<br>lowering social security ta<br>increasing retirement age|ith the<br>x for all<br>s to 65, a|generatio<br>workes<br>nd maint|n younger<br>by 1%ay<br>aining co|than 30<br>ear from<br>nstant re|In 1997,<br>1997 to 20<br>placement|06 (to 23<br>ratio un|% In 200<br>der PAY|6),<br>G||
|---|---|---|---|---|---|---|---|---|---|
||1995|1996|1997|1998|2000|2005|2010|2020|<br>2030|
|As % of formal GDP||||||||||
|Payroll contributions (all)|8.43|9.14|9.14|9.43|9.35|8.76|8.70|9.21|<br>9.42|
|Total<br>PAYG expenditure|8.49|9.64|9.99|10.23|10.33|8.30|8.30|9.01|<br>8.99|
|Balance|-0.06|-0.50|-0.85|-0.80|-0.97|0.46|0.41|0.20|<br>0.43|
|Funded Tier (trillions of Kbv., curr. price)||||||||||
|Total assets (stock)|||192|492|1496|7268|21264|125200|538987|
|Gov't borrowing from Funded tier|||192|267|462|965|2154|9252|<br>28597|
|(as % of formal GDP)|||1.9%|2.2%|2.7%|3.2%|4.4%|7.1%|<br>8.4%|
|Stock of gov't debt|||192|492|1496|6614|19498|117325|512827|
|(as % of formal GDP)|||2%|4%|9%|22%|39%|90%|<br>150%|
|Extra resources needed for PAYG|||-86|-97|-166|0|0|0|0|
|(as % of formal GDP)|||-0.8%|-0.8%|-1.0%|0.0%|0.0%|0.0%|<br>0.0%|
|Average replacement ratio|29%|29%|30%|31%|31%|31%|31%|31%|<br>31%|
|System dependency ratio|111%|118%|114%|107%|99%|71%|68%|71%|<br>69%|
|Share offormalsector employment|59%|59%|62%|65%|69%|71%|71%|72%|<br>72%|

Note: In 1997, for workers youngerthan 30, 32% tax goes into their personal account, 1% is used for social pensions.

in 1 998, for workers younger than 31, 31 % tax goes to funded tier, 1 % is used for social pensions, etc., and after 2006, 22% tax will go to funded tier,1 % is used for social pensions. Real interest rate on funded tier balance is 3% annually.

Scenario 13. Starting the funded tier with the generation younger than 30 in 1997, lowering social security tax for all workers by 1% a year from 1997 to 2006 (to 23% in 2006), increasing retirement ages to 65, and lowering replacement ratio under PAYG

||1995|1996|1997|1998|2000|2005|2010|2020|2030|
|---|---|---|---|---|---|---|---|---|---|
|As % of formal GDP||||||||||
|Payroll contributions (all)|8.43|9.14|9.14|9.44|9.36|8.76|8.71|9.21|<br>9.42|
|Total PAYG expenditure|8.49|9.64|9.89|9.85|9.85|7.75|7.62|7.90|<br>7.59|
|Balance|-0.06|-0.50|-0.75|-0.41|-0.49|1.02|1.09|1.30|<br>1.84|
|Funded Tier (trillions of Kbv., curr. price)||||||||||
|Total assets (stock)|||192|492|1495|7264|21256|125176|538928|
|Gov't borrowing from Funded tier|||192|267|462|796|1818|7800|23795|
|(as % of formal GDP)|||1.9%|2.2%|2.7%|2.6%|3.7%|6.0%|<br>7.0%|
|Stock of govt debt|||192|492|1495|5854|16840|99950|433474|
|(as % of formal GDP)|||2%|4%|9%|19%|34%|76%|127%|
|Extra resources needed for PAYG|||-76|-50|-83|0|0|0|0|
|(as % of formnal<br>GDP)|||-0.8%|-0.4%|-0.5%|0%|0%|0%|0%|
|Average replacement ratio|29%|29%|29%|29%|30%|29%|29%|27%|26%|
|System dependency ratio|111%|118%|114%|107%|99%|71%|68%|71%|69%|
|Share of formal sector employment|59%|59%|62%|65%|68%|71%|71%|72%|72%|
|<br>Note: For workers enrolled under the new pla<br>Real interest rate on funded ter balanc|n, 22% ta<br>e is 3% a|x goes Int<br>nnually.|o their pers|onal accou|nt,1<br>% is us|ed for soc|ial pensio|ns.||