system, no reserves are accumulated and all contributions are paid out in the same period. The opposite of a PAYGO system is a funded system, in which contributions are accumulated and paid out later (together with the interest on it) when eligibility requirements are met. U.S. Social Security An important example of such a PAYGO system in this second sense is Social Security in the U.S. In that system, contributions are paid by the currently employed population in the form of the Federal Insurance Contributions Act tax (FICA), while recipients are mostly individuals of at least 62 years of age. Social Security is not a pure PAYGO system, because it accumulates excess revenue in the Old-Age, Survivors, and Disability Insurance Trust Funds (OASDI). See also Generational accounting Statutory Pay-As-You-Go Act of 2010 References External links Transition to Accrual Accounting -- IMF Technical Guidance Note, 2007 Government finances in the United States United States federal budgets United States federal legislation