[nec4b]

Why would you limit yourself to only those two options? E.g. You could also have a collective system of pension funds where money you pay for your future pension would accumulate (invest) instead of pay as you go system, where the money is immediately spend by the state.

[jraph]

I'm sure there are plenty other options, those are the ones I know exist (there are variants).

I'm not sure what benefits your proposal brings.

Whenever you have an amount of money you don't spend immediately, you have to worry about inflation and investing (that's also of course true for the second option)

And the first option force pensions to be in the country's annual budget. For the better and the worse.