For the past ten years the politicians have been advocating private pension plans and pushing a new system embodied in a range of models, e.g. pensions for the self-employed, for employees, as well as company pension plans. In such cases, the contributions are put into personal accounts and capitalized. Capital accumulation depends predominantly on two factors, namely the yield and the duration. The compound interest effect ensures that long-term saving will result in considerable accumulated capital, which is then paid out as pension. On the other hand, when the final amount has been accumulated, the mathematical effect of compound interest will result in a situation where there are degressive capital requirements for a pension if the duration is considerable.
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