What is the pay-as-you-go system? The explanation can be found in the glossary.
The pay-as-you-go system is a way of financing benefits and is applied in Switzerland to Old Age and Survivors' Insurance (AHV). Benefits paid to pension beneficiaries in a given year are financed directly by contributions collected from employed persons in the same year. The contributions are "allocated," meaning the younger generation finances the older generation and is then supported by the next generation in the future.