What is the difference between a pre-funded model and a "pay-as-you-go" system for social safety net programs?
A) Entitlements come from current earnings of other people in a "pay-as-you-go" system.
B) Workers' contributions are accrued over their lifetime in a "pay-as-you-go" system.
C) High rates of medical "overtreatment" occur in a pre-funded model.
D) Affordable housing and universal design affect a pre-funded model.

Question

Quizplus · Accepted Answer

In a "pay-as-you-go" system, the current workers' contributions are used to pay the benefits of current retirees, meaning entitlements indeed come from the current earnings of other people. In contrast, a pre-funded model involves setting aside funds during a worker's career to finance their own benefits upon retirement, rather than relying on future workers' contributions.

What Is the Difference Between a Pre-Funded Model and a "Pay-As-You-Go