【正文】 economic issues. Furthermore, economists have traditionally ignored pensions. Designing and running pension systems was left to noneconomists, who were not extensively concerned with how to finance pensions in the longterm or with how to counteract these pension systems’ negative externalities. The new Polish pension system belongs to very small number of successful attempts to apply modern thinking in the area of pensions. This does not mean – as some may assume – giving up social security goals. Rather, the key idea was to give up the inefficient methods of delivering social security in order to save its goals and principles. This paper consists of two parts. The first focuses on a discussion of general issues that need to be addressed when designing a pension system. These issues are presented in a way that goes beyond the traditional way of thinking on pensions. In regards to this second part of the paper, it is important to point out that most countries in the current EU member states and candidate countries have pension systems that are essentially the same at the basic policy level. As such, the solutions in one member state or candidate country can be expected to be the same. Like European states such as France, Germany, Italy, the Czech Republic, Hungary and other European states, Poland and Sweden over the past decades and until the late 1990’s developed inefficient, costly pension systems. As such, in part two of the paper we shall examine how Poland has now successfully implemented the approach presented in the first part of the paper, and created a fundamentally strong a nd neutral pension system. Selected general issues 3 Pension system design has to take into account a number of issues. Their full presentation and discussion goes beyond the scope of this paper This paper presents only a list of the issues for consideration and the most important observations. The pension system: externalities versus neutrality The description of a pension system depends strongly on both the aggregated and individual viewpoint. From the aggregated perspective, the pension system is a way of dividing current GDP between a part kept by the working generation and a part allocated to the retired generation. From the individual perspective, the pension system is a way of ine allocation over a person’s life cycle. The above holds irrespective to the technical method applied or the ideological viewpoint. The pension system – as defined above – is not necessarily payasyougo or funded. Such features stem from technical elements additionally applied on the top of the pension system, rather than from the system itself. If the pension system design assumes anonymous participation and a substantial scale of redistribution then we usually call this system payasyougo. If the pension system design uses financial markets, then we usually call it funded. However, these two typically used concepts do not exhaust all possible binations of anonymous versus individualised participation and financial versus nonfinancial pension system design techniques used. The dualistic payasyougo versus funded approach leaves aside the bination of individual participation in a system that does not use financial markets. This approach also neglects the fact that using financial markets means investment (pension portfolio consists of priv