Our country chooses the mode of the united accounts of social welfare,turning from "pay-as-you-go system" into "Accumulation Pension System",which will bring us more rigorous challenges and trials.

From the aspect of demography, the two basic methods of pension funds--pay-as-you-go system and funded system represent period balance and cohort balance respectively.

In resource constraint economies, the cumula tive system contributes to increasing savings and thus to promoting economic dev elopment; in demand constraint economies with insufficient aggregate demand, the pay-as-you-go system is beneficial to readjusting income distribution and mo re to facilitating economic development.

The educational expenditures in the fully funded social security are more than those in the pay-as-you-go,while the physical capitals in the fully fun.

Under the impact of so-called“grey hair wave”, the payment crisis of public pension systems based on traditional pay-as-you-go mechanism becomes deeper and deeper.

The population aging process all over the world puts a lot of pressure on some countries, in which the funding pattern is organized under the pay-as-you-go system.

There are three financing patterns of social endowment insurance: pay-as-you-go scheme, fully funded pension scheme and partial accumulation foundation scheme.

In Russia, the population and economy situations have not matched with the curra nt Pay As You Go system, so Russian government got to reform the pension plan.