Chest Pain

CHEST PAIN Chest Pain Overview If you are having severe pain, crushing, squeezing, or pressure in your chest that lasts more than a few minutes, or if the pain moves into your neck, left shoulder, arm, or jaw, go immediately to a hospital emergency department. Chest pain is one of the most frightening symptoms a person can have. It is sometimes difficult even for a doctor or other medical professional to tell what is causing chest pain and whether it is life-threatening. * Any part of the chest can be the cause of the pain including the heart, lungs, esophagus, muscle, bone, and skin. Because of the complex nerve distribution in the body, chest pain may actually originate from another part of the body. * The stomach or other organs in the belly (abdomen), for example, can cause chest pain. Potentially life-threatening causes of chest pain are as follows: Causes of Chest Pain 1. Heart attack (acute myocardial infarction): A heart attack occurs when blood flow to the arteries that supp ly the heart (coronary arteries) becomes blocked. With decreased blood flow, the muscle of the heart does not receive enough oxygen. This can cause damage, deterioration, and death of the heart muscle. . Angina: Angina is chest pain related to an imbalance between the oxygen demand of the heart and the amount of oxygen delivered via the blood. It is caused by blockage or narrowing of the blood vessels that supply blood to the heart. Angina is different from a heart attack in that the arteries are not completely blocked, and it causes little or no permanent damage to the heart. â€Å"Stable† angina occurs repetitively and predictably while exercising and goes away with rest. â€Å"Unstable† angina results in unusual and unpredictable pain not relieved totally by rest, or pain that actually occurs at rest. . Aortic dissection: The aorta is the main artery that supplies blood to the vital organs of the body, such as the brain, heart, kidneys, lungs, and intestines. Dissec tion means a tear in the inner lining of the aorta. This can cause massive internal bleeding and interrupt blood flow to the vital organs. 4. Pulmonary embolism: A pulmonary embolus is a blood clot in one of the major blood vessels that supplies the lungs. It is a potentially life-threatening cause of chest pain but is not associated with the heart. 5. Spontaneous pneumothorax: Often called a collapsed lung, this condition occurs when air enters the saclike space between the chest wall and the lung tissue. Normally, negative pressure in the chest cavity allows the lungs to expand. When a spontaneous pneumothorax occurs, air enters the chest cavity. When the pressure balance is lost, the lung is unable to re-expand. This cuts off the normal oxygen supply in the body. 6. Perforated viscus: A perforated viscus is a hole or tear in the wall of any area of the gastrointestinal tract. This allows air to enter the abdominal cavity, which irritates the diaphragm, and can cause chest pain. . Cocaine-induced chest pain: Cocaine causes the blood vessels in the body to constrict. This can decrease blood flow to the heart, causing chest pain. Cocaine also accelerates the progression of atherosclerosis, a risk factor for a heart attack. Causes of chest pain that are not immediately life-threatening include the following: 8. Acute pericarditis: T his is an inflammation of the pericardium, which is the sac that covers the heart. 9. Mitral valve prolapse: Mitral valve prolapse is an abnormality of one of the heart valves in which the â€Å"leaves† of the valve bulge into the upper heart chamber during contraction. When this occurs, a small amount of blood flows backward in the heart. This is believed by some to be a cause of chest pain in certain people, although this has not been proven with certainty. 10. Pneumonia: Pneumonia is an infection of the lung tissue. Chest pain occurs because of inflammation to the lining of the lungs. 11. Disorders of the esophagus: Chest pain from esophageal disorders can be an alarming symptom because it often mimics chest pain from a heart attack. (a)Acid reflux disease (gastroesophageal reflux disease, GERD, heartburn) occurs when acidic digestive juices flow backward from the stomach into the esophagus. The resulting heartburn is sometimes experienced as chest pain. (b)Esophagitis is an inflammation of the esophagus. (c)Esophageal spasm is defined as excessive, intensified, or uncoordinated contractions of the smooth muscle of the esophagus. 12. Costochondritis: This is an inflammation of the cartilage between the ribs. Pain is typically located in the mid-chest, with intermittently dull and sharp pain that may be increased with deep breaths, movement, and deep touch. 13. Herpes zoster: Also known as shingles, this is a reactivation of the viral infection that causes chickenpox. With shingles, a rash occurs, usually only on one small part of the body. The pain, often very severe, is usually confined to the area of the rash. The pain may precede the rash by 4-7 days. Risk factors include any condition in which the immune system is compromised, such as advanced age, HIV, or cancer. Herpes zoster is highly contagious to people who have not had chickenpox or have not been vaccinated against chickenpox for the five days before and the five days after the appearance of the rash. HEART ATTACK A heart attack is caused by coronary heart disease, or coronary artery disease. Heart disease may be caused by cholesterol build-up in the coronary arteries (atherosclerosis), blood clots, or spasm of the vessels that supply blood to the heart. Risk factors for a heart attack are:- (a) High blood pressure (b) Diabetes (c) Smoking (d) High cholesterol (e) Family history of heart attacks at ages younger than 60 years, one or more previous heart attacks, male gender (f) Obesity (g) Postmenopausal women are at higher risk than premenopausal women. This is thought to be due to loss of the protective effects of the hormone estrogen at menopause. It was previously treated by hormone supplements (hormone replacement therapy, or HRT). However, research findings have changed our thinking on HRT; long-term HRT is no longer recommended for most women. (h) Use of cocaine and similar stimulants. Angina Causes 1. Angina may be caused by spasm, narrowing, or partial blockage of an artery that supplies blood to the heart. 2. The most common cause is coronary heart disease, in which a blood clot or buildup of fatty material inside the blood vessel (atherosclerosis) reduces blood flow but does not completely block the blood vessel. 3. Angina can be triggered by exercise or physical exertion, by emotional stress, or by certain heart rhythm disorders (arrhythmias) that cause the heart to beat very fast. Aortic Dissection Causes Aortic dissection may be caused by conditions that damage the innermost lining of the aorta. (a)These include uncontrolled high blood pressure, connective-tissue diseases, cocaine use, advanced age, pregnancy, congenital heart disease, and cardiac catheterization (a medical procedure). (b) Men are at higher risk than women. (c) A similar condition is aortic aneurysm. This is an enlargement of the aorta that can rupture, causing pain and bleeding. Aneurysms can occur in the aorta in the chest or the abdomen. Pulmonary Embolism Causes Pulmonary embolism risk factors include: (a)Sedentary lifestyle, (b)Obesity, (c)Prolonged immobility, (d) Fracture of a long bone of the legs, (e) Pregnancy, (f)Cancer, (g) History or family history of blood clots, (j)Irregular heartbeat (arrhythmias), (k) Heart attack, (l)Congestive heart failure. Spontaneous Pneumothorax Causes 1. Spontaneous pneumothorax (collapsed lung) occurs when the pressure balance between the sac that contains the lung and the outside atmosphere is disrupted. 2. Injury to the chest that pierces through to the lung sac is the most common cause of this condition. This can be caused by trauma, as in a car wreck, bad fall, gunshot wound or stabbing, or in surgery. 3. Some very thin and tall people may suffer a spontaneous pneumothorax due to stretched lung tissues and abnormal air sacs in the upper portions of their lungs. It is possible for these abnormal air sacs to rupture with even a sneeze or excessive coughing. 4. Other risk factors for pneumothorax include AIDS-related pneumonia, emphysema, severe asthma, cystic fibrosis, cancer, and marijuana and crack cocaine use Perforated Viscus Causes Perforated viscus may be caused by direct or indirect injury. Irritation to the diaphragm in this case comes from below the chest. The diaphragm is the muscle that allows us to breathe. It is located up under the ribs and separates the chest and abdominal cavity. Any irritation to the diaphragm, even from below it, can cause pain to be felt in the chest. Risk factors not related to trauma are: (a)Untreated ulcers, * (b)Prolonged or forceful vomiting, * (c)Swallowing a foreign body, * (d)Cancer, * (e)Appendicitis, * (f)Long-term steroid use, (g)Infection of the gallbladder, * (h)Gallstones, and * (j)AIDS. * * * Pericarditis Causes Pericarditis can be caused by viral infection, bacterial infection, cancer, connective-tissue diseases, certain medications, radiation treatment, and chronic renal failure. (a) One life-threatening complication of pericarditis is cardiac tamponade. Cardiac tamponade is an accumulation of fluid around the heart. This prevents the hear t from effectively pumping blood to the body. Symptoms of cardiac tamponade include sudden onset of shortness of breath, fainting, and chest pain. Pneumonia Causes Pneumonia may be caused by viral, bacterial, or fungal infections of the lungs. Esophagus Related Causes Chest pain originating from the esophagus may have several causes. Acid reflux (GERD) may be caused by any factors that decrease the pressure on the lower part of the esophagus, decreased movement of the esophagus, or prolonged emptying of the stomach. This condition may be brought on by: (a)Consumption of high-fat foods, (b)Nicotine use, (c)Alcohol use, (d)Caffeine, pregnancy, (d) Certain medications (for example, nitrates, calcium channel blockers, anticholinergics, estrogen, progesterone), (f)diabetes, g)scleroderma. (h) Esophagitis may be caused by yeast, fungi, viruses, bacteria, or irritation from medications. (j) Esophageal spasm is caused by excessive, intensified, or uncoordinated contractions of the smooth muscle of the esophagus. Spasm may be triggered by emotional upset or swallowing very hot or cold liquids. Heart Attack Symptoms Typical heart attack pain occurs in th e mid to left side of the chest and may also extend to the left shoulder, the left arm, the jaw, the stomach, or the back. Other associated symptoms are shortness of breath, increased sweating, nausea, and vomiting. Women may experience symptoms of heart attack similar to men (chest pain), but they also may be more atypical. Atypical symptoms include: (a) Neck pain (b) Jaw pain (c) Shoulder pain (d) Upper back (e) Abdominal discomfort, (f) Shortness of breath, (g) Nausea or vomiting, (h) Abdominal pain, (j)Heartburn, (k) Sweatiness, (l) Light-headedness, (m) Dizziness, or (n) Unexplained fatigue. * Angina Symptoms Angina is similar to heart attack pain but occurs with physical exertion or exercise and is relieved by rest or nitroglycerin. Angina becomes life threatening when pain occurs at rest, has increased in frequency or intensity, or is not relieved with at least three nitroglycerin tablets taken five minutes apart. This is considered to be unstable angina, which may be a warning sign of an impending heart attack. Aortic Dissection Symptoms The chest pain associated with aortic dissection occurs suddenly and is described as â€Å"ripping† or â€Å"tearing. † The pain may radiate to the back or between the shoulder blades. Because the aorta supplies blood to the entire body, symptoms may also include: (a)Angina-type pain, (b)Shortness of breath, (c)Fainting, d)Abdominal pain, or (e)Symptoms of stroke. Pulmonary Embolism Symptoms Symptoms of a pulmonary embolus include: The sudden onset of shortness of breath, rapid breathing, and sharp pain in the mid chest, which increases with deep breaths. Symptoms of pneumothorax include: The sudden onset of shortness of breath,sharp chest pain, rapid heart rate, dizziness, lightheadedness, or faintness. Perforated Viscus Symptoms Perforated viscus comes on suddenly with severe abdominal, chest, and/or back pain. Abdominal pain may increase with movement or when breathing in and may be accompanied by a rigid, boardlike abdominal wall. Pericarditis Symptoms The pain of pericarditis is typically described as a sharp or stabbing pain in the mid-chest, worsened by deep breaths. pain may mimic the pain of a heart attack, because it may radiate to the left side of the back or shoulder. One distinguishing factor is that the pain is worsened by lying flat and improved by leaning forward. When lying flat, the inflamed pericardium is in direct contact with the heart and causes pain. When leaning forward, there is a space between the pericardium and the heart. people report a recent cold, fever, shortness of breath, or pain when swallowing just before developing pericarditis. Mitral Valve Prolapse Symptoms Mitral valve prolapse usually has no symptoms, but some people experience palpitations (sensation of rapid or strong heartbeat) and chest pain. Chest pain associated with mitral valve prolapse differs from that of typical angina in that it is sharp, does not radiate, and is not related to physical exertion. Other symptoms include fatigue, light-headedness, and shortness of breath. Complications include infection of the heart valves, mitral valve regurgitation (an abnormal blood flow within the chambers of the heart), and abnormal heart rhythms, which rarely cause sudden death. Pneumonia Symptoms The chest pain of pneumonia occurs during prolonged or forceful coughing. The pain is usually one-sided an is worsened by coughing. Other associated symptoms include fever, coughing up mucus (sputum), and shortness of breath. Esophagus Related Symptoms With chest pain originating from the esophagus, symptoms depend on the source. * (a)Symptoms of gastroesophageal reflux disease (GERD) include: (b)Heartburn, (c)Painful swallowing, (d)Excessive salivation, (e)Dull chest discomfort, (f)Chest pressure, or (g)Severe squeezing pain across the mid chest. h)You may feel uncomfortable or may experience: (j)Profuse sweating, (k)Pallor, (l)Nausea, and (m)Vomiting. Symptoms of esophagitis include difficulty swallowing, painful swallowing, or symptoms of GERD. The chest pain comes on suddenly and is not relieved by antacids. The pain of esophageal spasm is usually intermittent and dull. It is located in the mid-chest and may radiate to the back, neck, or shoulders. DIAGNOSIS He art Attack In the hospital emergency department, the healthcare providers use three basic procedures to decide if a patient is having a heart attack. (a) The first is the symptoms reported by the patient. * (b) The second is an electrocardiogram (ECG or EKG), an electrical tracing of the heart's activity. On the ECG, it may be possible to tell which vessels in the heart are blocked or narrowed. * (c) The third is measurement of enzymes produced by the heart muscle cells when they do not receive enough oxygen. These enzymes are detectable with blood tests and are called cardiac enzymes. Angina Angina is diagnosed by the same methods doctors use to diagnose heart attacks. In angina, the test results reveal no permanent damage to the heart. The diagnosis is made only after the possibility of a heart attack has been ruled out, usually by negative results on three sets of cardiac enzyme tests. the ECG may show abnormalities, these changes are often reversible. * Another way to diagnose angina is the stress test: these tests monitor your ECG during exercise or other stress to identify blockages in blood vessels to the heart. * Cardiac catheterization is used to identify blockages. This is a special type of x-ray (angiography or arteriography) that uses a harmless dye to highlight blockages or other abnormalities in blood vessels. Aortic Dissection The diagnosis of aortic dissection is based on the symptoms the patient describes, chest x-ray, and other special imaging tests. On a chest x-ray, the aorta will have an abnormal contour or appear widened. * Transesophageal echocardiography is a specialized ultrasound of the heart in which a probe is inserted into the esophagus. The technique is performed under sedation or general anaesthesia. The dissection may be identified very accurately by a CT scan of the chest or angiography. * * Pulmonary Embolism * * The diagnosis of pulmonary embolism is made from a variety of sources. Description of the patient's symptoms and results of ECG and chest x-ray all may contribute to the diagnosis, but are not definitive. patient will be asked if they have had any symptoms of a blood clot in the leg. The healthcare provider may draw blood drawn from the patient's artery to check the levels of oxygen and other gases. Abnormalities in blood gases indicate a problem in the lungs that is preventing the patient from getting enough oxygen. A ventilation-perfusion scan (V/Q scan) compares blood flow to oxygen intake in different segments of the lung. An irregularity in just one segment can indicate an embolism. CT scan of the lungs is another way to determine if a patient has a pulmonary embolus. It may be done instead of the V/Q scan. Spontaneous Pneumothorax Spontaneous pneumothorax is diagnosed by physical exam and chest x-ray. A CT scan may be helpful in locating a small pneumothorax. Perforated viscus usually can be identified by a chest x-ray with the patient standing upright or an abdominal x-ray lying on the left side. -rays in these positions allow air to rise to the diaphragm, where it can be detected. The symptoms and the results of the physical exam and other lab tests also assist in diagnosis. * Pericarditis * * Acute pericarditis is usually diagnosed by the patient's symptoms, serial ECGs, and echocardiography. Certain lab tests may be helpful in determining the cause. * * Pneumonia Pneumonia is diagnosed by the patient's symptoms and medical history, physical examination, and chest x-ray. Esophagus Disorders of the esophagus causing chest pain are diagnosed by a process of el imination. The diagnosis is made on the basis of the patient's symptoms and medical history, after ruling out cardiac causes and observing whether the patient experiences pain relief from antacids. Chest Pain Treatment Self-Care at Home Heart Attack If you suspect that you or someone you are with may be having a heart attack, call for emergency services or go to the nearest hospital emergency department. * While waiting for the ambulance, have the patient chew two baby aspirin or at least half of a regular aspirin – at least 160 mg. There is no evidence that taking more than this helps more, and the patient could have unwanted side effects if they take too much. * It is important to chew the aspirin before swallowing it because chewing decreases the time the medicine takes to have an effect. Chewing an aspirin in the early stages of a heart attack may reduce the risk of death and it may also reduce the severity of the attack. Angina If the patient has had angina and has nitroglycerin tablets available, have the patient place one under the tongue. This may aid in increasing blood flow to blocked or narrowed arteries. If the chest pain continues in the next five minutes, take another tablet under the tongue. If, after three nitroglycerin tablets, the patient does not have relief of the chest pain, go to the nearest emergency department. Esophagus the pain is from acid reflux (GERD), it may be relieved with antacids. Even if the patient's pain goes away after taking an antacid, do not assume they are not having a heart attack. The patient should still be evaluated in a hospital emergency department. Medical Treatment Heart Attack Treatment 1. Treatment for a heart attack is aimed at increasing blood flow by opening arteries blocked or narrowed by a blood clot. * 2. Medicines used to achieve this include aspirin, heparin, and clot-busting (thrombolytic) drugs. * 3. Other medications can be used to slow the heart rate, which decreases the workload of the heart and reduces pain. * 4. Angioplasty is a way of unblocking an artery. Angiography is done first to locate narrowing or blockages. A very thin plastic tube called a catheter is inserted into the artery. A tiny balloon on the end of the catheter is inflated. This expands the artery, providing a wider passage for blood. The balloon is then deflated and removed. Sometimes a small metal scaffold called a stent is placed in the artery to keep it expanded. * 5. Surgery may be required if medical treatment is unsuccessful. This could include angioplasty or cardiac bypass. * * Angina Treatment * * Treatment of angina is directed at relieving chest pain that occurs as the result of reduced blood flow to the heart. The medication nitroglycerin is the most widely used treatment. Nitroglycerin dilates (widens) the coronary arteries. It is often taken under the tongue (sublingually). People with known angina may be treated with nitroglycerin for three doses, five minutes apart. the pain remains, nitroglycerin is given by IV, and the patient is admitted to the hospital and monitored to rule out a heart attack. Long-term treatment after the first episode of angina focuses on reducing risk factors for atherosclerosis and heart disease. Aortic Dissection Treatment 1. Suspected aortic dissection often is treated with medications that reduce blood pressure. 2. Medications that slow the heart rate and dilate the arteries are the most widely used. * 3. Close monitoring is required to avoid lowering the blood pressure too much, which can be dangerous. * 4. Surgical repair is required for any dissection that involves the ascending (upward) portion of the aorta. * * Pulmonary Embolism Treatment * * 1. Anyone with a presumed or documented pulmonary embolism requires admission to the hospital. * * 2. Treatment usually includes supplemental oxygen and medication to prevent further clotting of blood, typically heparin. * * 3. If the embolism is very large, clot-busting medications are given in some situations to dissolve the clot. * * 4. Some people undergo surgery to place an umbrella-like filter in a blood vessel to prevent blood clots from the lower extremities from moving to the lungs. * * Pneumothorax Treatment 1. A pneumothorax without symptoms involves six hours of hospital observation and repeat chest x-rays. * 2. If the size of the pneumothorax remains unchanged, the patient is usually discharged with a follow-up appointment in 24 hours. * 3. If the patient develop symptoms or the pneumothorax enlarges, they will be admitted to the hospital. The patient will undergo catheter aspiration or have a chest tube inserted to restore negative pressure in the lung sac. Perforated Viscus Treatment Any disruption or perforation of the intestinal tract (viscus) is a potentially life-threatening emergency. Immediate surgery may be required. Pericarditis Treatment Viral pericarditis usually improves with 7-21 days of therapy with nonsteroidal anti-inflammatory agents such as aspirin andibuprofen (for example, Motrin). Pneumonia Treatment Pneumonia is treated with antibiotics, and pain medication is given for chest wall tenderness. Costochondritis Treatment Costochondritis is usually treated with nonsteroidal anti-inflammatory medication such as ibuprofen. Esophageal Conditions Treatment The three major esophageal disorders that cause chest pain; 1) acid reflux (GERD), 2) esophagitis, and 3) esophageal spasm, are treated with antacid therapy; antibiotic, antiviral, or antifungal medication; medication to relax the muscles of the esophagus; or some combination of these. Follow-up No matter what the cause of chest pain, regular follow-up visits with your healthcare provider are important. This will help you remain as healthy as possible and prevent worsening of your condition. Prevention Heart Attack Prevention Prevention of heart attack and angina involves living what the American Heart Association calls a â€Å"heart healthy† lifestyle. Reducing your risk factors has a significant effect on reducing your risk. * (a) Don't smoke. * (b) Maintain a healthy weight. * (c) Eat nutritious, low-fat foods in moderate quantities. * (d) If you drink alcohol, use alcohol moderately. * (e) Engage in physical activity or exercise for at least 30 minutes every day. (f) Control high blood pressure and high cholesterol. * (g) If you have diabetes, control your blood sugar every day. Aortic Dissection Prevention Aortic dissection may be prevented by controlling high blood pressure and getting proper screening if the patient has a familial disposition to this disorder. Pulmonary Embolism Prevention (a) Prevention of pulmonary embolism includes living a heart healthy lifestyle. (b) No one should smoke, but women older than 35 years who use birth control pills are at especially high risk from smoking. c) When traveling on extended trips that require sitting for long periods of time (plane, car, train, etc. ) or other times of leg immobilization, get up and allow time for stretching and movement of the legs. Isometric contractions of the calves are helpful if getting out of the seat is not possible. * (d) If the patient has leg swelling, particularly if one is disproportionate to the other, see the doctor or healthcare provider. (e) You should always receive preventive anticoagulant medication after surgery, especially after orthopedic surgery. Spontaneous Pneumothorax Prevention Smoking cessation decreases the risk of spontaneous pneumothorax. Perforated Viscus Prevention Treating peptic ulcers appropriately and avoiding swallowing foreign bodies reduces the risk of perforated viscus. Pericarditis Prevention Because many cases of acute pericarditis are caused by viruses, effective handwashing may reduce transmission of infectious viral agents. Pneumonia Prevention Effective handwashing and good hygiene will help reduce the transmission of infectious viruses and bacteria that can cause pneumonia. Esophagus Disease Prevention (a) Acid reflux (GERD) can be prevented to a certain extent in most people. * (b) Avoid foods and other substances that bring on or worsen symptoms, especially fatty foods * (c) Stop smoking * (d) Use alcohol in moderation, if at all * (e) Avoid eating large meals * (f) Avoid eating for three hours before bedtime * (g) Avoid lying down right after eating * (h) Elevate the head of your bed Outlook Early medical intervention improves survival in potentially life-threatening illnesses involving chest pain. Heart attack and unstable angina: Heart disease, which includes heart attacks and angina, is the leading cause of death for American adults . Whether you survive a heart attack depends on the time it takes to get medical treatment, the region and extent of injury within the heart, and the presence of any other risk factors. Aortic dissection: This condition is life-threatening. Quick action in getting medical treatment is essential with aortic dissection. When left untreated, about 33% of patients die within the first 24 hours, and 50% die within 48 hours. The two week mortality rate approaches 75% in patients with undiagnosed ascending aortic dissection. Pulmonary embolism: Even with early treatment, 1 in 10 people with pulmonary embolism die within the first hour. It is treatable if it is not rapidly severe and caught early. Patients are often maintained on blood thinners as treatment. Pneumothorax: Most people with this condition recover fully as long as it is not associated with other life-threatening injuries (like in an auto accident). It occurs mostly tall, thin, young people without lung disease. Patients who have had one spontaneous pneumothorax have about a 50% chance of recurrence. Other illnesses causing pneumothorax and complications from the chest tube placement may prolong or worsen the condition. Perforated viscus: With early detection and intervention, the prognosis for perforated viscus is good in relatively healthy people. If you are in poor health prior to the perforation you will have a worse outcome. Acute pericarditis: Although the course may vary with each person, the outcome is good if the disorder is treated promptly. Most people recover in two weeks to three months. Pneumonia: In young, healthy adults, the prognosis for pneumonia is good with appropriate treatment. Prognosis is generally poorer in the elderly and in people with weakened immune systems such as those with HIV/AIDS. Chest pain originating from the esophagus: Reflux disease (GERD) affects about one-fourth of the adult population and has a very low death rate. Esophagitis may lead to ulcerations, scarring, or narrowing of the esophagus. With the exception of possible perforation, which has a high death rate, the overall prognosis is good. Esophageal spasm has a good outcome.

Burn Victim

Burns are very dangerous because if you survive the burn you are still at a large risk for infection. It is very hard to tell if the burned area is infected because the first signs of an infection are that the area is red, inflamed, and warm to the touch. A burned area already has these signs. It is also very easy to get an infection from a burn because the first defense against bacteria is the skin and burns damage the skin. More than ten thousand burn victims die a year from infection. There are six different degrees of burns.A first degree burn damages the outer layers of skin called the epidermis. A second degree burn damages the layers of skin under the epidermis called the dermis. Third degree burns damage both layers and possibly the muscle, tendons, fat, and bones. Fourth degree burns damage everything all the way to the bone. Fifth and sixth degree burns are usually only used once the person is dead because the burned area would be destroyed and it is not common for a person burned that badly to be burned in only a small area.It would be extremely surprising if someone survived a burn of the fifth or sixth degree and if they did the burned area would have to be a limb and it would have to be amputated. Another big worry of a burn victim is dehydration. Due to the heat from a burn, the blood vessels dilate and the plasma from the blood escapes into the skin. This causes blisters on less severe burns. Second degree burns are the worst burn that might blister. After second degree burns the skin becomes raw and oozes plasma. On a large area this can cause extreme liquid loss that may cause the victim to go into shock and suffer from dehydration.If a large area of skin is very damaged skin grafting may be necessary. Skin grafting is when the burned skin is removed and new skin from another part of your body is used to replace it. The upper thighs are often used because they are not as often seen. Skin can also be used from a family member or from a skin ban k, much like a blood bank. There is also a new way to get skin for a burn victim. Living cells from the victim are taken to a laboratory and grown into a piece of skin. If the burn is very deep in the skin a deep piece of healthy skin maybe needed.A second surgery may be necessary to close where the healthy skin was taken from if it is too deep. There are between one and two million people in America that seek medical attention each year due to burns. Fifty to seventy thousand people are hospitalized due to burns. Of those fifty to seventy thousand thirty to forty of them are under the age of fifteen. Burns are very dangerous. Even if the burn isn’t bad enough to kill the victim they are still at a high risk of death if the burn is very large. Even if they survive they may still need to have surgeries or amputations.

Battering is a Momentary Loss of Temper

Battering is a form of domestic violence, which involves physical actions aimed at instilling pain, harm the body or to propagate a feeling of intimidation to a partner so that one can get and maintain full control over the victim (Prakashan, 2001). Battering as an abusive behavior has a long trailing history in the global society and its awareness, legislation and perception varies from one country to the other. Several myths have been conceived with a purpose of explaining the main causes of battering.It is in this interest therefore that this paper is written. It seeks to refute the proposed myth that battering is a momentarily loss of temper. Reliable information from the American Medical Association has shown that domestic violence is not an instantaneous thing but a process, which is cultivated by various factors and in most cases over a certain period of time (National Coalition Against Domestic Violence, 2009). The same point is underscored by the Surgeon General of the Unite d States report.True to the word, victims of battering have been subjected to this traumatizing experience over time. Momentarily loss of temper is, in my opinion dictates for occasional incidences of this abusive behavior, which is undoubtedly inhumane. The fact that battering is aimed at gaining and maintaining control over their partners as well as revenging or punishment for betrayals or mistakes done by the victim need to be appreciated right at the beginning of this discussion otherwise the rest of its content might not make the intended impact to the reader (Baskerville, 2006).Based on this fact and judging by the principles of reason one can see the possibility of a long and well planed battering incidence. For instance, unfaithfulness is a major drawback to the family but many a times, one of the partners may fail to have enough evidence on the same and therefore he or she has no ground for divorce (Prakashan, 2001). The problem becomes worse if their intimacy overcomes the ir desire to separate. This can amount to a feeling of betrayal, unhappiness and aggressiveness which as human beings, can accumulate to uncontrollable levels resulting to battering.Various studies have it that most women are more venerable to battering than men. This is evident in the physical strength of men as compared to women (National Coalition Against Domestic Violence, 2009). To avoid being branded a feminist, the author of this paper finds it necessary to mention that men are also victims of domestic violence mostly in forms of verbal and emotional abuse. As a matter of fact, physical abuse like battering is the highest order of family violence beyond which severe injuries or even death can occur (Buzawa, & Buzawa, 2003).Domestic violence starts in the least form like altering abusive words. If the problem is left unsolved, it propagates and instills emotional instabilities like depression, keeping victims isolated from friends and family members. Still if this is left unat tended, it will accumulate to levels which can amount to physical violence which is battering for this matter. In conclusion therefore, the above discussion dismisses the proposed myth that Battering is a momentary loss of temper.It underscores the fact that battering is a form of domestic violence which results from unattended simple forms of domestic violence like verbal and emotional abuse. It is indeed an inhuman act, but it is very common and hence it is the responsibility of any couples to address their differences in a more human manner. Simple forms of domestic violence should not be left unresolved otherwise they can amount to battering. References Baskerville, S. (2006). Family Violence in America: The Truth about Domestic Violence and Children Abuse.Retrieved August 11, 2010, from http://www. acfc. org/site/DocServer/familyviolence. pdf? docID=641 Buzawa, C. , & Buzawa, E. (2003). Domestic Violence: The Criminal Justice Response. California: sage Publications National Coa lition Against Domestic Violence. (2009). Domestic Violence Facts. Retrieved August 11, 2010, from http://www. ncadv. org/files/DomesticViolenceFactSheet(National). pdf Prakashan, P. (2001). Battered Women: A Study of Domestic Violence. Michigan: The University of Michigan.

Law and ethics Essay Example | Topics and Well Written Essays - 1000 words - 3

Law and ethics - Essay Example on, it is not wise for any director to take opportunities to serve their own interests on the account of the interests and gains of the company as this shows their incapability of fulfilling their duties of loyalty. Moreover, any director is liable to carrying out duties of care by obtaining information that enables him/her to make informed decisions. Directors should also make it their obligation to attend all committee and board meetings that are held during their tenure. This case discusses facts that relates to the failure of demonstrating fiduciary duties as director by Daniel by his move to persuade his colleagues to purchase a warehouse that was undervalued that worth more than $5000. Daniel also shows his incompetency by signing an insurance policy that was not capable of covering the risks of burglary and that which caused the company to loose $30000. It is clear that Daniel had a conflict of interest that benefitted Paul’s Ltd to pay lower prices and gain from the move by adding $3000 to his person al wealth. Daniel failed to carry out fiduciary duties of loyalty and care as an executive director, working as a chattered accountant of the Sofa & Bed Ltd. There is no doubt that he obtained all the necessary information before making his decision to buy the insurance policy, which caused the company to loose $30000. Daniel also fails to show his loyalty to the company when he allowed to be bribed by $3000 to offer lower price to Paul’s Ltd and accept the bribe as his person al gain. Corporate governance acts as a mechanism that protects the management; insiders from the outsiders; stakeholders, creditors, regulators and customers. Corporate governance; however, has shown major failure in the recent financial crisis, which portrayed a clear picture of real failure attributed to gatekeepers represented in audit and credit rating agencies when the CG failed to heed the alarm. Apparently, the gatekeeper too advantage of the deregulations proposed by SEC

Checks and Balances in the American Government Essay

Checks and Balances in the American Government - Essay Example This distinction and assignation of political powers is reflected in the political structure of the American government. The division of the government into three branches—the executive, legislative, and judiciary branches—is one way through which American society makes sure that their rights are respected, and the appointed individuals to represent the government will accomplish their responsibilities in accordance to what was mandated by the Constitution. Checks and balances work within the government in an overlapping and interdependent manner. The judiciary branch is the decision-making body that implements the American Constitution, and is not wholly liable to both executive and legislative branches of the government. It works with the legislative branch to the extent that the Congress proposes and passes bills which then become laws, which will then be utilized and implemented by the Judiciary. The executive branch, headed by the President, governs the American political society, overseeing that the political systems departments and agencies are functioning and servicing the citizenry. It is accountable to both judiciary and legislative branches in that the President and the agencies are responsible in ensuring that no anomalies or irregularities in the political processes happen. Lastly, the legislative branch of the government ensures that the society will benefit most from the government by providing them with laws that take ca re of the welfare of the citizenry.

Why do states want nuclear weapons Essay Example | Topics and Well Written Essays - 750 words

Why do states want nuclear weapons - Essay Example First and foremost we have to understand that many states view the nuclear club as a prestigious guild, for them it is a quick and sure-fire way to not only gain entry into the club but also gain international standing and stature. (Perkovich (1998) p.2) On the other hand gaining the status of a nuclear state can also bolster support for a regime in a particular country. Cases in point are both India and Pakistan. The surge in popularity of the BJP the ruling coalition party in power at the time of weaponized nuclear tests and massive popularity for the Prime minister of Pakistan Mr. Nawaz Sharif and his ruling party after the nuclear tests both illustrate the point. The double standards of the worlds only super power the US, towards Israel has caused some dissent in other nations. This has caused a letup in nonproliferation efforts and leads to decreasing pressure on countries trying to acquire nuclear status, hence more countries try to acquire these weapons. (Perkovich (1998) p.3-4) Another possible reason given to justify the acquisition of nuclear capability is that nuclear weapons can prevent regional and international conflicts due to the threat of mutual destruction. The apprehension countries with regards to its adversaries' present or future strength can serve as a strong motivation for a country to go nuclear as nuclear weapons may be a cheaper (on the whole) alternative to an economically disastrous and militarily dangerous conventional arms race. (Perkovich (1998) p.4) India and Pakistan as well as Israel, the U.S, Russia and China all developed nuclear weapons for reasons of national security. But in some cases as mentioned earlier security was not the only concern. India, U.K, France and even South Africa (which later abandoned its nuclear programme and was declared a nuclear weapons free country) all developed nuclear weapons to further their standing in the regional and international arena, to show-off their national scientific competency and establish themselves as key players in regional and international politics. (Perkovich (1998) p.6) Finally there can only be two views of the current situation and the future line of action. One idea is allowing the induction of more states in to the nuclear club i.e. allowing them to have the weapons. Since the threat of mutual destruction increases, the idea of minimal deterrence pops up. The other option is to limit proliferation of nuclear weapons moving into phased reduction of weapons till the ultimate goal of de-armament is achieved (Perkovich (1998) p.10). But one has to admit regardless of however much optimistic one might be that this scenario at least in the present or in the near future is not probable "at all", given the never-ending quest of countries to acquire nuclear capability and the disagreement amongst the members of the nuclear club on major non-proliferation issues. Work Cited Perkovich, George (Autumn, 1998), "Nuclear Proliferation". Foreign Policy, Volume No.

Social Policy With Reference to Social Security Essay

Social Policy With Reference to Social Security - Essay Example It had been an intense and traumatic time for the entire nation but also a realization that misfortune and tragedy were not restricted to the disadvantage alone. The task f re-building the state needed to take place at every level, as well as the re-building f lives: This led to a great expansion in the role f Government in society. Historically British social policy had been dominated by the Poor Laws. But now there was widespread support for reform and expansion f the welfare system. Development f such reforms would owe much to Fabianist beliefs and the Beveridge Report 1942. William Beveridge was appointed by the wartime Government to review Social Security Policy. His report concluded that the state should meet collective welfare needs and provide positive freedom to individuals by removing the Five Giant Evils. In 1945 Labour began addressing Beveridge's evil through state action introduced reforms: Claiming: 'Our policy was not f reformed capitalism, but progress towards a demo cratic socialism...the war had shown how much could be accomplished when public advantage was put before private vested interest. If that was right in wartime, it was right in peacetime' (Jones, 1991 p.117). To describe the social policy reforms, press at the time coined the phrase 'from the cradle to the grave'. Alcock describes the social policy proposals as: 'The social policy response to the depravation f depression' (Alcock, 2003 p.220). Prior to the NHS, health care was not a luxury everybody could afford. Access to a doctor was free to workers but this did not cover their families. Poor people often went without medical treatment, relying on home remedies or on the charity f a doctor. For the Government to fund the NHS and other evils economic growth and full employment were essential. Maynard Keynes advised the government to spend its way out f a recession by lowering taxes and investing more in projects and programmes. The government began to use Keynes theory f demand mana gement and in 1946 Minister Aneurin Bevan navigated proposals for the NHS passed two years earlier through parliament.  Ã‚  

Who Won the War of 1812 Essay Example | Topics and Well Written Essays - 500 words

Who Won the War of 1812 - Essay Example In fact, while the majority of Americans are familiar with the War of Independence and many can recite key events and turning points within it, few can do the same as regards the War of 1812, the second war with the British. Indeed, the War of 1812 appears to have been virtually ignored by historians. While determining the reasons for the aforementioned may be quite difficult, it can be argued that this is largely due to the fact that the war was inconclusive. In other words, not only does the war emerge as somewhat senseless but ended in a stalemate. A closer analysis of this particular conflict, however, exposes the aforementioned as a superficial understanding of the War of 1812. While it may have ended in a stalemate between the British and the American armies, an argument for the United States' victory can be made, both because of the Battle of New Orleans and the destruction of the Indian confederation. The War of 1812 was incited by nationalist sentiments and America's determined quest for independence. While the country had emerged victories from the American Revolution of 1783, Britain did not withdraw from the Great Lakes territory and provided the frontier Indians with quite significant backing against the American forces (Latimer, 2007).

The Process of How a Bill Becomes a Law Essay Example | Topics and Well Written Essays - 500 words

The Process of How a Bill Becomes a Law - Essay Example As an expression of the sovereign people, all laws are legislated in accordance with the highest law of the land—the Constitution. It is done through constitutionally prescribed processes that are often tedious and politically mired with controversies. Usually, a bill is introduced by the House of Representatives and is duly concurred by the Senate. Such bill is presented to the President of the United States for approval and signature. If the president signs it, the bill becomes a law, otherwise, the bill will be returned to the House where it originated with president’s objections. The latter will be put into the journal. The same will be reconsidered by the legislatures. If two-thirds of the House approved the reconsidered bill, it will become a law and such overturned the veto power of the executive. In a similar context, when the bill is presented to the president for signature and if such was not returned within ten working days, the bill likewise becomes a law. Such 10-day period, when it has lapsed, has a similar effect as if the president has signed it, unless the legislative body, by their adjournment prevents its return. As such, the bill will not become the law. The legislation of the law rests on the constitutionally mandated power of the legislative branch under Article 1, Section 1 of the Constitution. This process, however, has a complex and evolving mechanisms since the legislative body is composed of a hundred elected senators and 435 members of representatives from states with varying political interests and concerns relating to policy formulation. Bills ought to have undergone a process of consultations from constituents as they are the subjects of legislative agenda and developments. Their voices should be considered by representatives before they’d perform the mandates of advising and agreeing to treaties and other related policies. Bills, before it would become a law, are sourced from the multitude of ideas and proposals of people in each state.  Ã‚  

An Employee Refusal to Work Overtime Case Study Example | Topics and Well Written Essays - 250 words

An Employee Refusal to Work Overtime - Case Study Example If management explained that this overtime was necessary to put out a product for a customer that was debating on dropping the business’ services with a huge loss to the company. If I could get each party to understand the other’s point of view, my ultimate decision might not be necessary. That is what arbitration was intended to do. If I had to make a decision, I would have to find in Gryzmisk’s favor. The labor agreement is â€Å"changes to the work schedule† are to be â€Å"mutually agreeable to both the company and the union.† Six hours is a change in the work schedule. It does not matter that it is for a â€Å"limited and specified† time. Six hours more is a change even if it is a temporary change. The union does not want to agree to the change in Gryzmisk’s case, so the change was not mutually agreed to. The agreement does not say long term changes or excessive changes to the work schedule. It stipulates changes in the work schedule. Thus the 1-day suspension is wrong. He should not be suspended. I would also recommend if management was not satisfied with this decision or saw the agreement differently, then management and the union might have to draw up a new agreement. The new agreement would need to be clearer. If management wanted to be able to make â€Å"limited and specified† changes in a work schedule, that would need to be added to the agreement. Of course, the union would want changes that would make the agreement clearer in their favor. That would have to be a negotiation between the union and

The Intel Corporation Essay Example for Free

The Intel Corporation Essay Introduction The main purpose of this case analysis is to find the issue and problem that Intel Corporation faced and how they improve their performance and solve problems. First, I will summarize the history of Intel Corporation. Second, to point out the challenge that Intel Corporation has. And, third, I will use SWOT analysis to analyze the internal strengths and weakness and external opportunities and threats of Intel Corporation. Eventually, I will give some recommendation. History of Intel Corporation Intel Corporation is a leading microprocessor producer for personal computer (PC) in the world. Intel Corporation was formed by In 1968, Robert Noyce and Gordon Moore founded Intel Corporation. After Intel Corporation founded, they recruited several employees from Fairchild Semiconductor to help them. Intel Corporation was mostly influenced by Andy Grove. He was an autocratic leader and gave everyone lots of pressure. Under his rules and management style, Intel Corporation set a good culture result in the future success. Since the dawn of the Intel Corporation, it has gained the leading position in semiconductor industry such as memory chip and microprocessor. Intel invested heavily in their RD department in order to strengthen their innovative leading position to against competitors. However, in recently years, the personal computer industry appears the negative growth rate which may harm for Intel business due to the majority business comes from personal computer. Therefore, Intel Corporation should take a consideration of downward sign to seek opportunity to exploit the blue ocean market. SWOT analysis of Intel Strength 1. Product Diversification Intel has variety products such as processors, motherboards, servers, cable modems, and solid state drive. Although Intel has dominated the market, it still put a lot of efforts on their product innovation. Diversification of Products integrated not only provides customers one-stop purchasing but also attract different field customers. 2. Technology Innovative and Strong RD Competence Intel fully understands RD is the key to allow them to lead in high tech industry. Moreover, the customers will never feel satisfaction with buying the same or few types of microprocessors. In order to satisfy various demands, Intel always spend huge amount and put a lot of efforts into their RD department which makes Intel is able to introduce new products before its competitors. Consequently, Intel can provide the choices to the demand from high-end product with high price and the low-end demand with lower price. 3. Economic of Scale Intel has almost dominated the PC, laptop, and corporate computer’s CPU which allows Intel to build up highly barriers for the new entrants because of the large economies of scale. Once Intel reaches the economies scale, they have a significant cost advantage over its competitors and that this dominant ability will make its competitors are essentially price takers, with little power to set up their own prices. Weakness 1. The Struggle of Expanding Smartphone Business Many experts claim that the smart phone will be flagship product in high tech industry for next decades. However, currently, ARM (The Architecture for the Digital World) dominates the smart phone chip market and acknowledges the first mover advantaged. As a result, it is very difficult to expand smart phone chip business for Intel and lose its competitive advantage. 2. Downward Microprocessor Demand As I mentioned before, smart phone may take some market away from PC and laptop. Currently, the demand of PC and laptop’s CPU is decline but Intel cannot take any advantages on smart phone chip. Moreover, the majority of Intel’s business comes from Microprocessor which is very risky for Intel. As long as the demand drops dramatically, it will greatly harm for Intel. Opportunities 1. Keep Innovative Competitive Advantage Technology Innovation is a key to success in rapid changing and highly competitive high tech industry. Keeps it pioneering introduction new product will develop the entry barriers and gain the competitive advantages. 2. Product Improvement Recently, Intel has launched it smart phone processor chip to compete with ARM face to face. Although, their chip works better than ARM, their chip cost more power than ARM. Therefore, it is a very good opportunity to grasp market share that if Intel improve their product based on their strong RD. Threats 1. Globally Downward of Consumer Purchasing Power Economic crisis will trigger the downward pressure on consumer purchasing ability. Laptop and personal computer is consumer product when the decreased personal income will affect the demand. Consequently, the decreased of the demand will lead to negative impact on Intel’s sales and profits. 2. The Fighting Campaign from Competitor Although Intel has become the biggest company, they still need to pay attention on their competitor-AMD. The decisions made by Intel are highly dependent upon the action of their rivals. Intel needs to closely put their eye on AMD to avoid any technology fall behind to keep their leading innovation. Recommendation Intel should strengthen their PC and sever business by using technical leadership because the PC segment still estimates to have a growing market approximately 17% worldwide. Intel can launch more marketing campaigns and put more efforts on developing new technology to exploit more business. Intel can expand products into new device. The computing landscape is changing such as smart phone, smart phones, and tablets are connecting to the internet and become more intelligent. Intel should be more aggressive to pursue opportunities to expand their business in new device categories.

Mauritius National Pension Fund Financial Analysis

Mauritius National Pension Fund Financial Analysis The National Pension Fund and its financial implications on the economy of Mauritius Chapter 1: Introduction The philosophy of the National Pension Fund (NPF) includes the idea that one ought to earn a reasonable proportion after pension age of what one earned during ones working life. If you have contributed to the NPF and built up your pension points, you will get a pension which, when added to your old-age pension will be a reasonable. The National Pension Fund scheme is proposed as another mandatory saving for retirement. Once it is set up, the NPF will fit into Pillar 2 of the Multi-Pillar Model of the World Bank. The NPF nevertheless will not replace provident funds or retirement mutual funds, but rather improves saving channels for future retirees. Mauritius is found in the developing countries group where contractual savings, savings with insurance companies and pension funds exceed 40 percent of Gross Domestic Product and which represent a greater potential force in the domestic financial system. Pension funds account for 75 percent of contractual savings. The pension system is a balanced and well-managed multi-pillar. In Mauritius there have not many authors that have write specifically on that subject, that is, financial implication of National Pension Fund on the Mauritian economy. I have mainly used the research made by other analysts in other countries and try to apply it on the Mauritian economy. Obviously the result will not be the same, but try to make an estimate of it. Objectives of that Project: Analyse the overall financial implication of NPF Testing the financial effect of NPF on national savings Estimating the relationship between fiscal balance of Mauritius non-retirement account and the net saving that occurs within the NPF Chapter Outline Chapter one gives a brief overview of how the project is carry on. Chapter two makes an overview of the National pension fund, its evolution, structure and its financing source as well as government expenditure and the future of NPF. Chapter three is the literature review, that is, what writers around the globe have commented on the pension system. Chapter four is the research methodology. The research is carried out using regression equation to examine the financial implication NPF on our variables. Chapter five then come the analysis based on the results obtained, that is the financial effect of NPF on national savings and the relationship between fiscal balance of Mauritius non-retirement account and the net saving that occurs within the NPF. Then finally chapter seven will include suggestions and conclusions. Chapter 2: Literature Review Introduction Pension funds is be defined as forms of institutional investor, which collect, pool and invest funds contributed by sponsors and beneficiaries to provide for the future pension entitlements of beneficiaries (E PhilipDavis 1995). Pension fund offer individuals the mean to collect saving over their working life so as to finance their consumption needs in retirement, either by means of a lump sum or by provision of an annuity, while also supplying funds to corporations, households (via securitised loans) or governments for investment or consumption. Bodie(1990a) has formalized pension funds function as a form of retirement income insurance. E Philip Davis (1995) suggests that pension funds perform a number of the functions of the financial system more efficiently than banks or direct holdings. Their growth complements that of capital markets and they have acted as major catalysts of change in the financial landscape. But this is not the only reason for growth. It is also a consequence of fiscal incentives and benefits to employers, as well as growing demand arising from the ageing of the population. Pension funds are typically sponsored by employers, such as companies, public corporations, industry or trade groups; accordingly, employers as well as employees typically contribute. Funds may be internally or externally managed. The pension system is commonly divided into three pillars. The first pillar is the pay-as-you-go system based on payments by public institutions which are mainly funded by tax revenues. The second pillar constitutes fully funded pension funds with mandatory membership and the third pillar is based on fully funded pension saving schemes with voluntary membership. In a pay-as-you-go system, each generation pays for the costs of the currently retired in return for a commitment for the same treatment during its own retirement. Workers who spend their entire work and retirement life under a PAYGO system with constant tax rates will earn a real return on their contributions equal to the growth in the workforce plus the growth in the real wage (Samuelson, 1958, and Aaron, 1966). Pension funds provide millions of people in the world security and comfort in old age. Pension funds represent the savings of millions of people, and as Paul Myners says, the ability of funds to invest these assets effectively has a profound impact on their economic well being. Because so many people depend on pension funds to provide for their futures, ensuring the funds serve the needs of their members is a priority for Government. The social security system on the other hand as stated by law, guarantees people covered by its provisions either because they perform an occupational activity or meet the requirements established for non-contributory type social security, as well as dependent members of the family or similar, adequate protection in the contingencies and circumstances. Social Security has been defined as the protection which society provides for its members through a series of public measures against the economic and social distress that otherwise would be caused by the stoppage or substantial reduction of earnings resulting from sickness, maternity, employment injury, invalidity, old age and death; the provision of medical care; and the provision of subsidies for families with children. In the Social Security system, the money you pay into the system gets immediately paid back out to the people who are currently getting Social Security checks. The Social Security tax has been raising more money than is needed to pay for current benefits, in order to build up a surplus to help finance the retirement of the Baby Boom generation. The money is used in a sense to finance the government deficit, just like any other money the government borrows, Dean Baker (1998). The Social Security system is primarily a pay-as-you-go system, meaning that payments to current retirees come from current payments into the system. So Social Security will be the foundation of your retirement income. Thats because: You wont outlive your Social Security retirement benefit. It will be there for you for the rest of your life. Your Social Security benefit wont lose its value. From time to time, Social Security benefits are adjusted so they always keep pace with inflation. Why National Pension Fund? Worker myopia, or lack of foresight poor planning occurs because people give too little considerations to their future economic needs when making decisions about saving for retirement. Most people seem to have a natural inclination to live for today and avoid thinking about old age and death. Hence, they give very little systematic thought to the financial issues of old age until they come face to face with them. By the time they recognize they may have a problem when they retire, it is usually too late to fix. Government intervention through NPF has help people set aside a portion of their earnings when they are working so that they have an adequate income when they retire. Without compulsory contributions for retirement, myopic workers would not save enough to ensure an adequate retirement income and poverty would result. Another rationale for the existence of the compulsory contribution to the NPF is to protect the prudent that saves for retirement against those who do not save. Under a purely voluntary system some will contribute, others will not. As Boulding (1958) puts it in his argument, those who do not insure will have to be supported anyway-perhaps at lower levels and in humiliating and respect-destroying ways when they are in their non-productive phase of their life, but that they will escape the burden of paying premiums when they are in their productive phase. In fairness to those who insure voluntarily and in order to maintain the self-respect of those who would not otherwise insure, contributions for retirement should be made compulsory. Hence, mandatory contributions are necessary to achieve the retirement savings results that people need to have so as to have an adequate standard of living in their retirement years. Pension funds are also an important source of capital accumulation that can be used for different purposes as the build up the basic of national infrastructure, power stations and electric networks, Olli E. Kangas (2006). The Finnish case demonstrates that it was possible to unify social policy goals with the economic goals of building up modern industrial market economies. The Finnish experience has serves as a good example of how social policy has been successfully used as a developmental strategy, Mkandawire (2001). Pension funds are not only vital to the pension holders they provide for. They are also key players in the economy as a whole. Government Budget Pension funding issues have an important, but often hidden, impact on the finances of state governments, J. Fred Giertz (2003). In most countries, contributions to retirement funds are made by employers and employees each year. Yet, there is no requirement in the short run that these contributions be sufficient to fully fund the systems. Governments always ensure that pension payments are actually made to retirees, regardless of the level of contributions, as they are generally the funders of last resort. If pension systems are under funded, governments must deal with this problem sooner or later through additional contributions to the systems. If systems are over funded, government resources can be redirected from pensions to other government programs,J. Fred Giertz (2003). It is seen that private pensions reduce public pension spending in the longer term, once private schemes are mature. Private pensions is likely to increase budgetary pressures in the short term: if workers contributions go into their individual pension accounts, they cannot be used to pay for the pensions of the older generation; thus, governments have to finance pensions for the transition generation through taxation or borrowing, Nicholas Barr (2001). This will in a way affect the government budget. Unsustainable pension systems can be a problem to fiscal stability, economic growth, and poverty reduction. The need for pension reform has become pressing as demographic aging has strained pension systems around the world, leading to large expenditures, large deficits, and high contribution rates. In many cases the pension system has become a source of fiscal and macroeconomic instability, a constraint to economic growth, and an ineffective and or inequitable source of retirement income. J. Fred Giertz (2003)suggests thatnot only are pension asset changes large in comparison with state budgets, they are also growing and becoming more volatile. This trend is likely to continue and the relative size of state pension obligations is increasing. This suggests that pension funding is becoming an increasingly important aspect of state government. He also states that ‘state pension funding today is no sounder than in the early 1990s. This is not necessarily a cause for alarm, but it is a source of concern. Pension funding will be an increasingly important demand on state finances in the up coming years. In the G-10 (1998) report, it states that the ageing of populations could have dramatic effects on government finances. Under current policies, government spending in the G-10 countries is projected to rise sharply over the next several decades for several reasons. Per capita expenditure for the elderly is high in the areas of public retirement benefits and, in some countries, welfare support. Public expenditure on medical and health support for the elderly is also high and has been rising. If advances in medical technology come at ever increasing cost and if the incidence of health expenditure on the elderly continues to rise, the fiscal burden could become substantial in some countries. At the same time, government revenues will be adversely affected as the baby boom generation moves from its high income generating years to retirement. Countries whose revenues are tied more to consumption or value added taxes will tend to experience less of a deterioration in revenues than those that depend more heavily on income or payroll taxes. This would create a severe drag on national saving at a time when saving will be crucial to fostering the growth of labour productivity. Impacts of ageing population Norman Vincent Peale quotes that: â€Å"Age-based retirement arbitrarily severs productive persons from their livelihood, squanders their talents, scars their health, strains an already overburdened Social Security system, and drives many elderly people into poverty and despair. Ageism is as odious as racism and sexism.† Barry Bosworth (2003) argued that slowing economic growth and population aging in the major industrial countries have placed increased financial strain on pay-as-you-go (PAYGO) public pension systems. Retirement pensions have become a serious fiscal concern in most industrialized countries. Pensions are largely paid for from tax revenues and it is foreseen that contributions will need to be raised substantially during the coming decades. The World Bank (1994) states that high taxes are harmful to economic growth, since they reallocate resources to the informal sector, thereby reducing output in the more efficient formal market sector of the economy. The reasons are that many people are now nearing retirement age and that the populations nowadays live longer and have fewer children than in the past. Nicholas Barr (2001) argued that the effect on funded schemes is more restrained but equally unavoidable. When a large generation of workers retires, it liquidates its financial assets to pay for its pensions. If those assets are equities, sales of financial assets by the large pensioner generation will exceed purchases of assets by the smaller younger generation, leading to falling equity prices and, hence, to lower pensions. Alternatively, if those assets are bank accounts, high spending by the large pensioner generation will generate inflationary pressures and again reduce the value of pensions. Domestic savings The main views of the life-cycle theory stipulate that individuals try to smooth consumption over their lifetime, Brumberg and Modigliani (1954). Normally savings follow a hump shaped pattern, that is, income is relatively low when individuals are either very young or retired as during their working life savings rate is higher .Ageing Population increases the proportion of households with a relatively lower savings rate in the economy which leads to a decrease in private savings. Estimates of the impact of a change in the age structure of the population on private savings, shows that population ageing will be likely to reduce savings. As regard to public savings, population ageing is likely to exercise considerable pressure on public finances, Weil (2006). In the situation of the pension schemes of the current pay-as-you-go pension schemes that exist in many states, an ageing population implies that the number of beneficiaries increases while the number of contributors to the system decreases. The ageing population will also adversely affect public finances through higher healthcare and long-term care costs, given that older populations are more likely to make use of healthcare facilities, which, to a large extent, are provided by the public sector. Both microeconomic and macroeconomic studies find that the observed age profile of saving generally conforms with the life-cycle model, which implies that saving rates rise over a workers active career and then decline in retirement. Compared with macroeconomic analyses, microeconomic studies tend to show smaller variation in saving rates over the life cycle, this may be of the highly skewed distribution of wealth and saving across households, Ralph C. Bryant (2004). At a micro level, company or other obligatory pension funds can implement enforced saving by deferring wages and salaries, thereby reducing risk of a low replacement ratio. At a macro level, the increase in saving is not usually one-to-one, as increased contractual saving via pension funds is typically partly or wholly offset by declining flexible saving, E Philip Davis (1995). The remaining effect most likely results from liquidity constraints on some individuals (especially the young), who are unable to borrow in order to offset obligatory saving via pension funds early in the life cycle. It can also be anticipated that, even in a liberalized financial system, credit constraints will affect lower income individuals particularly severely, as they have no assets to guarantee and also have less secure employment. Therefore forced pensions saving will tend to increase their overall saving particularly markedly, Bernheim and Scholz (1992). On the other hand Samwick (2000) found a lower rate of saving in countries with extensive PAYG systems. Agosin (2002) extended their analysis and shows that the rise of saving was concentrated in the business sector, and that the net change in household saving was small. Implications for equilibrium real interest rates The forecasted declines in savings make the expected consequence of ageing on the equilibrium real interest rate ambiguous. If investment falls faster than domestic savings at each level of aggregate income, the real interest rate that clears the market for loanable funds is expected to fall, since it is difficult for savers to find profitable investment opportunities, J.C. Trichet (2007). On the other hand, if domestic savings were to fall faster than investment then the real interest rate would rise to reflect the relative scarcity of financial funds. This likely decline in interest rate that equalizes savings and investment could be identified developed financial markets. Even though the actual impact of the evolving demographic structure on the equilibrium real interest rate in the capital markets is something that is going to occur with a considerable lag, some economists have suggested that expectations of such developments may have already started to exert some influence on the pricing of bonds. Among other things, these analyses suggest that ageing could have contributed to the â€Å"flattening† of the yield curve that has been observed over the recent past, J.C. Trichet (2007). However as it is based on the assumption that capital market participants are perfectly forward looking, an assumption which is questionable, it should be treated with a great deal of caution: if it is true that financial markets tend to overreact to short term phenomena, the effects of ageing on the yield curve could be limited, DellaVigna and Pollet (2005). It has to be taken into consideration that these quantitative simulations require a number of qualifications. On one hand, some real world factors may make the true decline in the equilibrium real interest rate larger than estimated in macroeconomic models. For instance, older people may save more than predicted by the life cycle theory as they may want to leave a bequest to their children, putting further downward pressure on the equilibrium rate. The degree of risk aversion may also change with age as if the older people were systematically more risk averse than the young one, the accumulation of precautionary savings would lead to a higher than predicted savings rate and a lower than predicted real rate, Bakshi and Chen (1994).Moreover private savings rates may be significantly affected by pension reforms, Miles (2002). Pressures on Prices Hans J Blommestein (1998) states that concerns have been expressed that the growing demand for high quality private securities like equity and corporate bonds, associated with the growth of advance funded pension systems in search of investment opportunities (thereby increasing the demand for financial assets) and falling public sector borrowing requirements (thereby reducing the supply of government securities), would put strong upward pressure on the prices of financial assets. Here, the combination of the widespread privatisation of state owned enterprises and reform of pension systems brings the opportunity of killing two birds with one stone. Pension reform, which would increase the demand for equity, and privatisation, which expands the supply, at the same time permits a more balanced growth in private securities markets, at least over the medium term. In a somewhat longer term perspective, population ageing may have an impact on the risk premium, that is, the difference betwee n the returns on stocks and the yield on bonds. As asset preferences vary across age groups, the ageing of the baby boom generation could affect both absolute and relative positions of stock and bond prices. On average, middle age is the portion of the life cycle when saving rates are highest. Moreover, middle aged workers generally are more able and willing to hold a riskier portfolio; that is, one weighted more heavily towards stocks than bonds. This is a consequence of two factors: first, while still working, a stockholder is better able to make up for any bad equity returns; second, middle aged workers have a longer time horizon and thus are willing to accept more risk in exchange for the expectation of higher returns. Moreover, higher demand for stocks relative to bonds should increase the price of stocks relative to bonds, thus decreasing the equity premium. Thus, some have hypothesized that an ageing population would cause the equity premium to increase. But if the age of the population is increasing at least in part because life span is increasing, and thus time horizons are lengthening, then the ageing of the population does not necessarily imply that average risk aversion should be increasing and risk premium on stocks should be rising. After the baby boomers begin to retire, saving rates would tend to fall, stock and bond prices to decline, and the equity premium to rise as baby boom retirees shift their portfolios away from stocks toward bonds, Hans J Blommestein (1998). Population age structure can influence the demand for different classes of financial market assets both because of its effect on saving and because young, middle aged, and elderly savers may seek to hold their assets in different forms. Empirical studies have uncovered evidence that population age structure affects stock market prices and the real returns of different classes of financial assets, but the consistency of this evidence is not overwhelming. It is unclear whether the effects of demographic influences on asset prices and returns are large relative to the effects of other and less predictable determinants of prices and returns, Ralph C. Bryant (2004). Implications of population ageing for the conduct of monetary policy The life-cycle theory stipulates that , individuals during their working lives accumulate financial wealth in order to finance their consumption during retirement. As a consequence, populations who are near to retirement age will tend to have higher wealth to income ratios. Simultaneously, expected imbalances in publicly financed pension schemes make it possible to consider that the increasing number of retirees would depend more on their own accumulated wealth, as opposed to public pension provisions, to maintain their consumption levels. Consequently, the fraction of the population exposed to asset price fluctuations could increase with ageing, Young (2002). Bean (2004) argues that longer life expectancy would presumably strengthen this effect. Therefore, the transmission channel of monetary policy may be affected by ageing. In particular, the so called wealth channel, which links asset prices to consumption, may gain relative importance and play a vital role than in the past, G10 (2005). Miles (2002) points out that the monetary policy multiplier would probably rise with population ageing, mainly as a result of the increased wealth channel and greater price impact of monetary policy decisions. In spite of this, he also mentions that an older population is less likely to be credit constrained, especially when the pension system is reformed towards more funded systems. This might reduce the effectiveness of the credit channel. Depending on the relative importance of these channels, monetary policy could, in principle, become more or less effective with ageing. Miles suggests that the first effect is expected to dominate. A move towards demographic structure in which the population accounts for an increasing elderly population is expected to generate a gradual but persistent change in savings habits. This may results in an impact on the demand for all classes of assets even though certain sector of the capital market are likely to be affected more substantially than others. If, for example, older people are more risk averse and prefer to hold financial assets paying fixed income returns such as government securities, then the demand for government bonds would tend to increase relative to riskier investment options, such as equity, Bakshi and Chen (1994) and De Santis and Là ¼hrmann (2006). In this situation, where a larger part of households wealth is invested in nominal assets, price stability would be even more important for households, G10 (2005) and Bean (2004). Stable prices ensure that the real value of both pension entitlements and savings is maintained and prevent arbitrary redistributions of income and wealth to the detriment of the most vulnerable groups in society, in particular, pensioners. It is likely that, as a significant fraction of wealth is accumulated in real estate and financial assets, households exposure to asset price movements will tend to increase. This might coincide with a situation in which a large fraction of the population in their old age dis-saving phase are disposing assets in order to finance consumption during retirement. In this respect, some authors have warned that, when the baby-boom generation retires and starts to dissave, excess supply in financial markets could lead to a significant decline in asset prices, the consequences of which might be felt by the entire population, Siegel (1998), Abel (2001) and (2003). This view is known as the â€Å"asset meltdown† hypothesis. Yoo (1994) estimated that asset prices may drop by as much as 15% as a result of demographic change alone. This is why a credible commitment to maintaining price stability and, as a reflection, an orderly financial environment is and will remain so important for maintaining the standard of living of people, particularly for the poorest and the most vulnerable. Investment of Pension Fund The rapid growth of pension funds in many countries, and the stimulus they are providing to the growth of capital markets, both suggest that their activities as financial intermediaries merit considerable attention, E Philip Davis (2000). Pension funds have an impact on the stability of financial markets in several ways, most significantly through their investment behavior. Since early withdrawal of funds is usually restricted or forbidden, pension funds have long term liabilities, allowing holding of high risk and high return instruments. Accordingly, monies are intermediated by pension funds into a variety of financial assets, which include corporate equities, government bonds, real estate, corporate debt (in the form of loans or bonds), securitised loans, foreign holdings of the instruments mentioned above and money market instruments and deposits as forms of liquidity. Hellwig (1990) suggest that financial institutions can form long term relationships with borrowers, which reduce information asymmetry and hence moral hazard. Apart from economies of scale these considerations have arisen in the literature mainly for debt finance and for banks. Whereas the importance of information asymmetries and incomplete contracts is equally recognised for equity finance, the role of financial institutions as counterparts is less well developed. Equally, institutional investors such as pension funds may not rely on the same information and control mechanisms as banks. The role of pension funds is clearly not to facilitate exchange of goods, services and assets directly. This is because, unlike banks, money market funds, and to a lesser extent long term mutual funds, they do not offer liquid liabilities. Nevertheless, pension funds have had an important indirect role in boosting the efficiency of the financial systems, by influencing the structure of securities markets. This effect on micro structure links to their demand for liquidity, i.e. to transact in large size without moving the price against them, anonymously, and at low transactions costs. Pension funds provide risk control directly to households via the forms of retirement income insurance they provide, an advantage which largely reflects the unusual (among financial intermediaries) link of pension funds to employers. To assist in undertaking this risk control function they diversify assets as noted above and also act in securities and derivatives markets to hedge and control risk. As institutional investors, pension funds are well placed to use derivatives and other means of risk control; many innovations have been introduced or developed specifically to cater for their demand (Bodie 1990b, 1999). E Philip Davis (1995a) suggests that as pension funds focus mainly on government bonds and high grade corporate bonds, while banks tend to monopolise small business financing. And Lorenzo Bini Smaghi (2006) states that investing wisely matters for long term economic wellbeing, and that the portfolio allocation decision is of paramount importance in order to maintain living standards in the old age. Pension funds are the fastest growing of all financial institutions. They now cover half the labor force and represent one-eighth the financial assets of the entire household sector, Vincent P. Apilado (1972). The size of pension funds has also had an impact on the structure of financial markets: countries with large funded pension schemes tend to have highly developed securities markets; in countries with small pension-fund sectors, capital markets are relatively underdeveloped (the equity market in particular, Hans. J. Blommestein (1998). Living Standard M.  PONDS  (2003) states that the raison dà ªtre of wage indexed defined benefit pension funds is to provide insurance against standard of living risk after retirement, based on intergenerational risk sharing. Pension funds necessarily have to accept mismatch risk in providing this kind of insurance. Mismatch risk taken by the pension fund is risk for the funds stakeholders. The material living standards of tomorrows working and retired people will depend on the goods and services produced by those who will be working at the time. Changes in retirement income financing might alter the relative living standards of workers compared with retirees, but only later retirement could have a large effect in increasing living standards for both, Peter Hicks (2004). O Mauritius National Pension Fund Financial Analysis Mauritius National Pension Fund Financial Analysis The National Pension Fund and its financial implications on the economy of Mauritius Chapter 1: Introduction The philosophy of the National Pension Fund (NPF) includes the idea that one ought to earn a reasonable proportion after pension age of what one earned during ones working life. If you have contributed to the NPF and built up your pension points, you will get a pension which, when added to your old-age pension will be a reasonable. The National Pension Fund scheme is proposed as another mandatory saving for retirement. Once it is set up, the NPF will fit into Pillar 2 of the Multi-Pillar Model of the World Bank. The NPF nevertheless will not replace provident funds or retirement mutual funds, but rather improves saving channels for future retirees. Mauritius is found in the developing countries group where contractual savings, savings with insurance companies and pension funds exceed 40 percent of Gross Domestic Product and which represent a greater potential force in the domestic financial system. Pension funds account for 75 percent of contractual savings. The pension system is a balanced and well-managed multi-pillar. In Mauritius there have not many authors that have write specifically on that subject, that is, financial implication of National Pension Fund on the Mauritian economy. I have mainly used the research made by other analysts in other countries and try to apply it on the Mauritian economy. Obviously the result will not be the same, but try to make an estimate of it. Objectives of that Project: Analyse the overall financial implication of NPF Testing the financial effect of NPF on national savings Estimating the relationship between fiscal balance of Mauritius non-retirement account and the net saving that occurs within the NPF Chapter Outline Chapter one gives a brief overview of how the project is carry on. Chapter two makes an overview of the National pension fund, its evolution, structure and its financing source as well as government expenditure and the future of NPF. Chapter three is the literature review, that is, what writers around the globe have commented on the pension system. Chapter four is the research methodology. The research is carried out using regression equation to examine the financial implication NPF on our variables. Chapter five then come the analysis based on the results obtained, that is the financial effect of NPF on national savings and the relationship between fiscal balance of Mauritius non-retirement account and the net saving that occurs within the NPF. Then finally chapter seven will include suggestions and conclusions. Chapter 2: Literature Review Introduction Pension funds is be defined as forms of institutional investor, which collect, pool and invest funds contributed by sponsors and beneficiaries to provide for the future pension entitlements of beneficiaries (E PhilipDavis 1995). Pension fund offer individuals the mean to collect saving over their working life so as to finance their consumption needs in retirement, either by means of a lump sum or by provision of an annuity, while also supplying funds to corporations, households (via securitised loans) or governments for investment or consumption. Bodie(1990a) has formalized pension funds function as a form of retirement income insurance. E Philip Davis (1995) suggests that pension funds perform a number of the functions of the financial system more efficiently than banks or direct holdings. Their growth complements that of capital markets and they have acted as major catalysts of change in the financial landscape. But this is not the only reason for growth. It is also a consequence of fiscal incentives and benefits to employers, as well as growing demand arising from the ageing of the population. Pension funds are typically sponsored by employers, such as companies, public corporations, industry or trade groups; accordingly, employers as well as employees typically contribute. Funds may be internally or externally managed. The pension system is commonly divided into three pillars. The first pillar is the pay-as-you-go system based on payments by public institutions which are mainly funded by tax revenues. The second pillar constitutes fully funded pension funds with mandatory membership and the third pillar is based on fully funded pension saving schemes with voluntary membership. In a pay-as-you-go system, each generation pays for the costs of the currently retired in return for a commitment for the same treatment during its own retirement. Workers who spend their entire work and retirement life under a PAYGO system with constant tax rates will earn a real return on their contributions equal to the growth in the workforce plus the growth in the real wage (Samuelson, 1958, and Aaron, 1966). Pension funds provide millions of people in the world security and comfort in old age. Pension funds represent the savings of millions of people, and as Paul Myners says, the ability of funds to invest these assets effectively has a profound impact on their economic well being. Because so many people depend on pension funds to provide for their futures, ensuring the funds serve the needs of their members is a priority for Government. The social security system on the other hand as stated by law, guarantees people covered by its provisions either because they perform an occupational activity or meet the requirements established for non-contributory type social security, as well as dependent members of the family or similar, adequate protection in the contingencies and circumstances. Social Security has been defined as the protection which society provides for its members through a series of public measures against the economic and social distress that otherwise would be caused by the stoppage or substantial reduction of earnings resulting from sickness, maternity, employment injury, invalidity, old age and death; the provision of medical care; and the provision of subsidies for families with children. In the Social Security system, the money you pay into the system gets immediately paid back out to the people who are currently getting Social Security checks. The Social Security tax has been raising more money than is needed to pay for current benefits, in order to build up a surplus to help finance the retirement of the Baby Boom generation. The money is used in a sense to finance the government deficit, just like any other money the government borrows, Dean Baker (1998). The Social Security system is primarily a pay-as-you-go system, meaning that payments to current retirees come from current payments into the system. So Social Security will be the foundation of your retirement income. Thats because: You wont outlive your Social Security retirement benefit. It will be there for you for the rest of your life. Your Social Security benefit wont lose its value. From time to time, Social Security benefits are adjusted so they always keep pace with inflation. Why National Pension Fund? Worker myopia, or lack of foresight poor planning occurs because people give too little considerations to their future economic needs when making decisions about saving for retirement. Most people seem to have a natural inclination to live for today and avoid thinking about old age and death. Hence, they give very little systematic thought to the financial issues of old age until they come face to face with them. By the time they recognize they may have a problem when they retire, it is usually too late to fix. Government intervention through NPF has help people set aside a portion of their earnings when they are working so that they have an adequate income when they retire. Without compulsory contributions for retirement, myopic workers would not save enough to ensure an adequate retirement income and poverty would result. Another rationale for the existence of the compulsory contribution to the NPF is to protect the prudent that saves for retirement against those who do not save. Under a purely voluntary system some will contribute, others will not. As Boulding (1958) puts it in his argument, those who do not insure will have to be supported anyway-perhaps at lower levels and in humiliating and respect-destroying ways when they are in their non-productive phase of their life, but that they will escape the burden of paying premiums when they are in their productive phase. In fairness to those who insure voluntarily and in order to maintain the self-respect of those who would not otherwise insure, contributions for retirement should be made compulsory. Hence, mandatory contributions are necessary to achieve the retirement savings results that people need to have so as to have an adequate standard of living in their retirement years. Pension funds are also an important source of capital accumulation that can be used for different purposes as the build up the basic of national infrastructure, power stations and electric networks, Olli E. Kangas (2006). The Finnish case demonstrates that it was possible to unify social policy goals with the economic goals of building up modern industrial market economies. The Finnish experience has serves as a good example of how social policy has been successfully used as a developmental strategy, Mkandawire (2001). Pension funds are not only vital to the pension holders they provide for. They are also key players in the economy as a whole. Government Budget Pension funding issues have an important, but often hidden, impact on the finances of state governments, J. Fred Giertz (2003). In most countries, contributions to retirement funds are made by employers and employees each year. Yet, there is no requirement in the short run that these contributions be sufficient to fully fund the systems. Governments always ensure that pension payments are actually made to retirees, regardless of the level of contributions, as they are generally the funders of last resort. If pension systems are under funded, governments must deal with this problem sooner or later through additional contributions to the systems. If systems are over funded, government resources can be redirected from pensions to other government programs,J. Fred Giertz (2003). It is seen that private pensions reduce public pension spending in the longer term, once private schemes are mature. Private pensions is likely to increase budgetary pressures in the short term: if workers contributions go into their individual pension accounts, they cannot be used to pay for the pensions of the older generation; thus, governments have to finance pensions for the transition generation through taxation or borrowing, Nicholas Barr (2001). This will in a way affect the government budget. Unsustainable pension systems can be a problem to fiscal stability, economic growth, and poverty reduction. The need for pension reform has become pressing as demographic aging has strained pension systems around the world, leading to large expenditures, large deficits, and high contribution rates. In many cases the pension system has become a source of fiscal and macroeconomic instability, a constraint to economic growth, and an ineffective and or inequitable source of retirement income. J. Fred Giertz (2003)suggests thatnot only are pension asset changes large in comparison with state budgets, they are also growing and becoming more volatile. This trend is likely to continue and the relative size of state pension obligations is increasing. This suggests that pension funding is becoming an increasingly important aspect of state government. He also states that ‘state pension funding today is no sounder than in the early 1990s. This is not necessarily a cause for alarm, but it is a source of concern. Pension funding will be an increasingly important demand on state finances in the up coming years. In the G-10 (1998) report, it states that the ageing of populations could have dramatic effects on government finances. Under current policies, government spending in the G-10 countries is projected to rise sharply over the next several decades for several reasons. Per capita expenditure for the elderly is high in the areas of public retirement benefits and, in some countries, welfare support. Public expenditure on medical and health support for the elderly is also high and has been rising. If advances in medical technology come at ever increasing cost and if the incidence of health expenditure on the elderly continues to rise, the fiscal burden could become substantial in some countries. At the same time, government revenues will be adversely affected as the baby boom generation moves from its high income generating years to retirement. Countries whose revenues are tied more to consumption or value added taxes will tend to experience less of a deterioration in revenues than those that depend more heavily on income or payroll taxes. This would create a severe drag on national saving at a time when saving will be crucial to fostering the growth of labour productivity. Impacts of ageing population Norman Vincent Peale quotes that: â€Å"Age-based retirement arbitrarily severs productive persons from their livelihood, squanders their talents, scars their health, strains an already overburdened Social Security system, and drives many elderly people into poverty and despair. Ageism is as odious as racism and sexism.† Barry Bosworth (2003) argued that slowing economic growth and population aging in the major industrial countries have placed increased financial strain on pay-as-you-go (PAYGO) public pension systems. Retirement pensions have become a serious fiscal concern in most industrialized countries. Pensions are largely paid for from tax revenues and it is foreseen that contributions will need to be raised substantially during the coming decades. The World Bank (1994) states that high taxes are harmful to economic growth, since they reallocate resources to the informal sector, thereby reducing output in the more efficient formal market sector of the economy. The reasons are that many people are now nearing retirement age and that the populations nowadays live longer and have fewer children than in the past. Nicholas Barr (2001) argued that the effect on funded schemes is more restrained but equally unavoidable. When a large generation of workers retires, it liquidates its financial assets to pay for its pensions. If those assets are equities, sales of financial assets by the large pensioner generation will exceed purchases of assets by the smaller younger generation, leading to falling equity prices and, hence, to lower pensions. Alternatively, if those assets are bank accounts, high spending by the large pensioner generation will generate inflationary pressures and again reduce the value of pensions. Domestic savings The main views of the life-cycle theory stipulate that individuals try to smooth consumption over their lifetime, Brumberg and Modigliani (1954). Normally savings follow a hump shaped pattern, that is, income is relatively low when individuals are either very young or retired as during their working life savings rate is higher .Ageing Population increases the proportion of households with a relatively lower savings rate in the economy which leads to a decrease in private savings. Estimates of the impact of a change in the age structure of the population on private savings, shows that population ageing will be likely to reduce savings. As regard to public savings, population ageing is likely to exercise considerable pressure on public finances, Weil (2006). In the situation of the pension schemes of the current pay-as-you-go pension schemes that exist in many states, an ageing population implies that the number of beneficiaries increases while the number of contributors to the system decreases. The ageing population will also adversely affect public finances through higher healthcare and long-term care costs, given that older populations are more likely to make use of healthcare facilities, which, to a large extent, are provided by the public sector. Both microeconomic and macroeconomic studies find that the observed age profile of saving generally conforms with the life-cycle model, which implies that saving rates rise over a workers active career and then decline in retirement. Compared with macroeconomic analyses, microeconomic studies tend to show smaller variation in saving rates over the life cycle, this may be of the highly skewed distribution of wealth and saving across households, Ralph C. Bryant (2004). At a micro level, company or other obligatory pension funds can implement enforced saving by deferring wages and salaries, thereby reducing risk of a low replacement ratio. At a macro level, the increase in saving is not usually one-to-one, as increased contractual saving via pension funds is typically partly or wholly offset by declining flexible saving, E Philip Davis (1995). The remaining effect most likely results from liquidity constraints on some individuals (especially the young), who are unable to borrow in order to offset obligatory saving via pension funds early in the life cycle. It can also be anticipated that, even in a liberalized financial system, credit constraints will affect lower income individuals particularly severely, as they have no assets to guarantee and also have less secure employment. Therefore forced pensions saving will tend to increase their overall saving particularly markedly, Bernheim and Scholz (1992). On the other hand Samwick (2000) found a lower rate of saving in countries with extensive PAYG systems. Agosin (2002) extended their analysis and shows that the rise of saving was concentrated in the business sector, and that the net change in household saving was small. Implications for equilibrium real interest rates The forecasted declines in savings make the expected consequence of ageing on the equilibrium real interest rate ambiguous. If investment falls faster than domestic savings at each level of aggregate income, the real interest rate that clears the market for loanable funds is expected to fall, since it is difficult for savers to find profitable investment opportunities, J.C. Trichet (2007). On the other hand, if domestic savings were to fall faster than investment then the real interest rate would rise to reflect the relative scarcity of financial funds. This likely decline in interest rate that equalizes savings and investment could be identified developed financial markets. Even though the actual impact of the evolving demographic structure on the equilibrium real interest rate in the capital markets is something that is going to occur with a considerable lag, some economists have suggested that expectations of such developments may have already started to exert some influence on the pricing of bonds. Among other things, these analyses suggest that ageing could have contributed to the â€Å"flattening† of the yield curve that has been observed over the recent past, J.C. Trichet (2007). However as it is based on the assumption that capital market participants are perfectly forward looking, an assumption which is questionable, it should be treated with a great deal of caution: if it is true that financial markets tend to overreact to short term phenomena, the effects of ageing on the yield curve could be limited, DellaVigna and Pollet (2005). It has to be taken into consideration that these quantitative simulations require a number of qualifications. On one hand, some real world factors may make the true decline in the equilibrium real interest rate larger than estimated in macroeconomic models. For instance, older people may save more than predicted by the life cycle theory as they may want to leave a bequest to their children, putting further downward pressure on the equilibrium rate. The degree of risk aversion may also change with age as if the older people were systematically more risk averse than the young one, the accumulation of precautionary savings would lead to a higher than predicted savings rate and a lower than predicted real rate, Bakshi and Chen (1994).Moreover private savings rates may be significantly affected by pension reforms, Miles (2002). Pressures on Prices Hans J Blommestein (1998) states that concerns have been expressed that the growing demand for high quality private securities like equity and corporate bonds, associated with the growth of advance funded pension systems in search of investment opportunities (thereby increasing the demand for financial assets) and falling public sector borrowing requirements (thereby reducing the supply of government securities), would put strong upward pressure on the prices of financial assets. Here, the combination of the widespread privatisation of state owned enterprises and reform of pension systems brings the opportunity of killing two birds with one stone. Pension reform, which would increase the demand for equity, and privatisation, which expands the supply, at the same time permits a more balanced growth in private securities markets, at least over the medium term. In a somewhat longer term perspective, population ageing may have an impact on the risk premium, that is, the difference betwee n the returns on stocks and the yield on bonds. As asset preferences vary across age groups, the ageing of the baby boom generation could affect both absolute and relative positions of stock and bond prices. On average, middle age is the portion of the life cycle when saving rates are highest. Moreover, middle aged workers generally are more able and willing to hold a riskier portfolio; that is, one weighted more heavily towards stocks than bonds. This is a consequence of two factors: first, while still working, a stockholder is better able to make up for any bad equity returns; second, middle aged workers have a longer time horizon and thus are willing to accept more risk in exchange for the expectation of higher returns. Moreover, higher demand for stocks relative to bonds should increase the price of stocks relative to bonds, thus decreasing the equity premium. Thus, some have hypothesized that an ageing population would cause the equity premium to increase. But if the age of the population is increasing at least in part because life span is increasing, and thus time horizons are lengthening, then the ageing of the population does not necessarily imply that average risk aversion should be increasing and risk premium on stocks should be rising. After the baby boomers begin to retire, saving rates would tend to fall, stock and bond prices to decline, and the equity premium to rise as baby boom retirees shift their portfolios away from stocks toward bonds, Hans J Blommestein (1998). Population age structure can influence the demand for different classes of financial market assets both because of its effect on saving and because young, middle aged, and elderly savers may seek to hold their assets in different forms. Empirical studies have uncovered evidence that population age structure affects stock market prices and the real returns of different classes of financial assets, but the consistency of this evidence is not overwhelming. It is unclear whether the effects of demographic influences on asset prices and returns are large relative to the effects of other and less predictable determinants of prices and returns, Ralph C. Bryant (2004). Implications of population ageing for the conduct of monetary policy The life-cycle theory stipulates that , individuals during their working lives accumulate financial wealth in order to finance their consumption during retirement. As a consequence, populations who are near to retirement age will tend to have higher wealth to income ratios. Simultaneously, expected imbalances in publicly financed pension schemes make it possible to consider that the increasing number of retirees would depend more on their own accumulated wealth, as opposed to public pension provisions, to maintain their consumption levels. Consequently, the fraction of the population exposed to asset price fluctuations could increase with ageing, Young (2002). Bean (2004) argues that longer life expectancy would presumably strengthen this effect. Therefore, the transmission channel of monetary policy may be affected by ageing. In particular, the so called wealth channel, which links asset prices to consumption, may gain relative importance and play a vital role than in the past, G10 (2005). Miles (2002) points out that the monetary policy multiplier would probably rise with population ageing, mainly as a result of the increased wealth channel and greater price impact of monetary policy decisions. In spite of this, he also mentions that an older population is less likely to be credit constrained, especially when the pension system is reformed towards more funded systems. This might reduce the effectiveness of the credit channel. Depending on the relative importance of these channels, monetary policy could, in principle, become more or less effective with ageing. Miles suggests that the first effect is expected to dominate. A move towards demographic structure in which the population accounts for an increasing elderly population is expected to generate a gradual but persistent change in savings habits. This may results in an impact on the demand for all classes of assets even though certain sector of the capital market are likely to be affected more substantially than others. If, for example, older people are more risk averse and prefer to hold financial assets paying fixed income returns such as government securities, then the demand for government bonds would tend to increase relative to riskier investment options, such as equity, Bakshi and Chen (1994) and De Santis and Là ¼hrmann (2006). In this situation, where a larger part of households wealth is invested in nominal assets, price stability would be even more important for households, G10 (2005) and Bean (2004). Stable prices ensure that the real value of both pension entitlements and savings is maintained and prevent arbitrary redistributions of income and wealth to the detriment of the most vulnerable groups in society, in particular, pensioners. It is likely that, as a significant fraction of wealth is accumulated in real estate and financial assets, households exposure to asset price movements will tend to increase. This might coincide with a situation in which a large fraction of the population in their old age dis-saving phase are disposing assets in order to finance consumption during retirement. In this respect, some authors have warned that, when the baby-boom generation retires and starts to dissave, excess supply in financial markets could lead to a significant decline in asset prices, the consequences of which might be felt by the entire population, Siegel (1998), Abel (2001) and (2003). This view is known as the â€Å"asset meltdown† hypothesis. Yoo (1994) estimated that asset prices may drop by as much as 15% as a result of demographic change alone. This is why a credible commitment to maintaining price stability and, as a reflection, an orderly financial environment is and will remain so important for maintaining the standard of living of people, particularly for the poorest and the most vulnerable. Investment of Pension Fund The rapid growth of pension funds in many countries, and the stimulus they are providing to the growth of capital markets, both suggest that their activities as financial intermediaries merit considerable attention, E Philip Davis (2000). Pension funds have an impact on the stability of financial markets in several ways, most significantly through their investment behavior. Since early withdrawal of funds is usually restricted or forbidden, pension funds have long term liabilities, allowing holding of high risk and high return instruments. Accordingly, monies are intermediated by pension funds into a variety of financial assets, which include corporate equities, government bonds, real estate, corporate debt (in the form of loans or bonds), securitised loans, foreign holdings of the instruments mentioned above and money market instruments and deposits as forms of liquidity. Hellwig (1990) suggest that financial institutions can form long term relationships with borrowers, which reduce information asymmetry and hence moral hazard. Apart from economies of scale these considerations have arisen in the literature mainly for debt finance and for banks. Whereas the importance of information asymmetries and incomplete contracts is equally recognised for equity finance, the role of financial institutions as counterparts is less well developed. Equally, institutional investors such as pension funds may not rely on the same information and control mechanisms as banks. The role of pension funds is clearly not to facilitate exchange of goods, services and assets directly. This is because, unlike banks, money market funds, and to a lesser extent long term mutual funds, they do not offer liquid liabilities. Nevertheless, pension funds have had an important indirect role in boosting the efficiency of the financial systems, by influencing the structure of securities markets. This effect on micro structure links to their demand for liquidity, i.e. to transact in large size without moving the price against them, anonymously, and at low transactions costs. Pension funds provide risk control directly to households via the forms of retirement income insurance they provide, an advantage which largely reflects the unusual (among financial intermediaries) link of pension funds to employers. To assist in undertaking this risk control function they diversify assets as noted above and also act in securities and derivatives markets to hedge and control risk. As institutional investors, pension funds are well placed to use derivatives and other means of risk control; many innovations have been introduced or developed specifically to cater for their demand (Bodie 1990b, 1999). E Philip Davis (1995a) suggests that as pension funds focus mainly on government bonds and high grade corporate bonds, while banks tend to monopolise small business financing. And Lorenzo Bini Smaghi (2006) states that investing wisely matters for long term economic wellbeing, and that the portfolio allocation decision is of paramount importance in order to maintain living standards in the old age. Pension funds are the fastest growing of all financial institutions. They now cover half the labor force and represent one-eighth the financial assets of the entire household sector, Vincent P. Apilado (1972). The size of pension funds has also had an impact on the structure of financial markets: countries with large funded pension schemes tend to have highly developed securities markets; in countries with small pension-fund sectors, capital markets are relatively underdeveloped (the equity market in particular, Hans. J. Blommestein (1998). Living Standard M.  PONDS  (2003) states that the raison dà ªtre of wage indexed defined benefit pension funds is to provide insurance against standard of living risk after retirement, based on intergenerational risk sharing. Pension funds necessarily have to accept mismatch risk in providing this kind of insurance. Mismatch risk taken by the pension fund is risk for the funds stakeholders. The material living standards of tomorrows working and retired people will depend on the goods and services produced by those who will be working at the time. Changes in retirement income financing might alter the relative living standards of workers compared with retirees, but only later retirement could have a large effect in increasing living standards for both, Peter Hicks (2004). O