【正文】 trong 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 private equities) or deferring taxes (pension portfolio consists of government bonds), which is obviously not the same. Adding redistribution or financial markets to the pension system generates externalities. These externalities can be positive and negative. Redistribution within the pension system can generate positive externalities if the system is inexpensive, namely the part of GDP allocated to the retired generation is not large. If the redistribution is large, then it generates negative externalities, such as contributing to persistently high unemployment and weak growth. Using financial markets causes positive externalities for growth if the pension system spends contribution money on investment. If the contributions are spent on government debt they may lead to negative externalities similar to those of large redistributive system, namely more tax distortions. This can happen if the rate of return on government debt is persistently above the rate of GDP growth. There exists yet another option, namely to bring the pension system as close toeconomic neutrality as possible. This option requires, 4 among other things, bining individual participation in the system with dividing GDP between generations based on real economy developments, such as has been done in Poland and Sweden. Demographic structure: consequences of the change .Irrespective of the pension system design technique used, the pension system exchanges a right of the retired generation for a part of the product of the working generation. The exchange can be anised in various ways and also the rights can b