- retirement) plans into the following pillars:
Pillar 1 – A standardized, state-run pension system, which offers basic coverage and is primarily focused on reducing poverty.
Pillar 2 – A funded system that recipients and employers pay into; this includes pension funds and defined-contribution accounts/plans.
Pillar 3 – Voluntary private funded accounts, including individual savings plans, insurance, etc.
The three-pillar system outlined here very closely resembles what we see in the United States:
Pillar 1 – Social Security provides basic but universal coverage.
Pillar 2 – Comprised of 401(k)s and other employer plans
Pillar 3 – Personal savings and investment plans
This multi-tiered system is seen as more effective than having one state-run pension system to serve all citizens.
Investment dictionary. Academic. 2012.
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