Article deals with the existence and functioning of automatic balance mechanism (ABM) in the PAYG pension systems. By uncovering theoretical knowledge on ABM, we focus on its ability to overcome political risks and to stabilize the PAYG system in short and long run without drastic shock interventions, which are politically unstable. Further, we created and applied the ABM model into specific conditions of Slovak PAYG system and found its ability to balance PAYG system on cash and accrual basis. At the same time, we propose inevitable steps and changes in order to implement the model into practice and legislation.
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