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Pension System (pension + system)
Kinds of Pension System Selected AbstractsTHE YOUNG HELD TO RANSOM , A PUBLIC CHOICE ANALYSIS OF THE UK STATE PENSION SYSTEMECONOMIC AFFAIRS, Issue 1 2008Philip Booth As populations age, it will become increasingly difficult to reform state pension systems. Reform will not be impossible, but the process of ,buying off' interest groups will be expensive. State pension provision must use the contributory principle combined with an accruals system , though private pension provision would be better still. There are serious flaws in the so-called ,citizens pension' much promoted by interest groups in the UK. [source] The Distributional Impact of Pension System Reforms: An Application to the Italian CaseFISCAL STUDIES, Issue 4 2004MARGHERITA BORELLA Between 1992 and 1995, the Italian pension system was deeply reformed, and it is now moving from an earnings-related to a contribution-based scheme. The pre-1992 system was generous and redistributive; however, often redistribution operated from the poor to the rich, notably because the benefit formula was based on the last years of earnings, thus benefiting workers with steep earnings profiles. The new contribution-based scheme may enhance equity by removing (some of) the inequities implicit in the previous system. Simulations calibrated on Italian male employees show that the contribution-based scheme reduces inequality among all groups considered, with the exception of college graduates employed in the private sector. When taking into account the average level of the benefit as well as its distribution, the analysis shows mixed results depending on the worker's number of years of contribution and on their retirement age, as well as on the steepness of their earnings profile. [source] Assessing gender inequality in the Turkish pension systemINTERNATIONAL SOCIAL SECURITY REVIEW, Issue 2 2008Adem Y. Elveren Abstract Since the 1990s, the welfare regime in Turkey has become more market-oriented. The introduction of the Individual Pension System (IPS), a privately managed defined contribution scheme, is part of this process. This paper uses an autoregressive stochastic model in order to show the total effect of specific disadvantages, such as a shorter working life, less earnings, longer life expectancy, real wage growth, administrative cost and risk aversion, on the retirement benefits of women in Turkey. Using an actuarial model, the article aims to contribute to the literature by investigating the gender gap in the Turkish defined contribution scheme. [source] Current and Future Problems of Capital Accumulation in the Chinese Pension SystemINTERNATIONAL SOCIAL SECURITY REVIEW, Issue 4 2000Zhang Jinchang The decree establishing a uniform system of basic pensions for employees in municipal and private enterprises, published by the State Council on 16 July 1997, reflects the Chinese Government's ultimate choice in favour of a partly private funded scheme to cover future pension needs. This article examines the reasons which led to this choice and asks how easy or otherwise it will be to find the capital to finance it. The authors believe that the partly private scheme is more advantageous than other methods and is right for China. Many issues, however, remain the focus of lively debate. In particular, a realistic coordination of individual and group accumulation is needed in order to avoid shortfalls in capital formation and the dangers of inadequate benefit provision. To safeguard the subsistence needs of former workers in state-owned enterprises, a system of equalization at national level is needed, and problems continue over how future pension insurance funds should best be managed. [source] The Limits of External Empowerment: EMU, Technocracy and Reform of the Greek Pension SystemPOLITICAL STUDIES, Issue 3 2001Kevin Featherstone This paper seeks to explain an aborted attempt at reform of the Greek pension system, following a series of previous failures. It applies the framework of rational choice institutionalism in order to examine the strategy and setting of the relevant actors. The pension system had become a huge fiscal burden on the state, threatening Greece's position in the European Union. Moreover, its gross inequalities of provision and bureaucratic inefficiency were symptoms of the embedded clientelism and ,disjointed corporatism' that stood in the way of the government's self-proclaimed ,modernization' programme. In the event, though EMU entry requirements empowered the reform momentum, a combination of the strategic weakness of key actors and the entrenched opposition of sectoral interests dissipated the initiative. The failure suggests the relevance of the wider social setting to reform: in particular, the weakness of the technocratic community and the relative absence of a supportive ,advocacy coalition', beyond the dominance of the ,party state'. Faced with criticism, the political leadership sought to protect their electoral position and postponed pressing decisions. The case study raises important questions about the scope for such reform in Greece and the future stability of the ,Euro-zone'. [source] The Reform of Pension Systems: Winners and Losers Across Generations in the United Kingdom and GermanyECONOMICA, Issue 266 2000David Miles In this paper we perform simulations with a stylized model of the United Kingdom and Germany to show which generations might be gainers, and which losers, from a transition from an unfunded to a funded state pension system. We show that it is likely that more than one generation will be direct losers as a result of a transition (especially in Germany). If more than one generation are direct losers, then, in order for those generations not to be net losers, the chain of bequests (in the initial equilibrium) needs to satisfy a simple condition, which we derive and analyse. [source] Facing the Age Wave and Economic Policy: Fixing Public Pension Systems with Healthcare in the Wings,FISCAL STUDIES, Issue 1 2005David A. Wise Abstract There are two overriding problems faced by ageing societies. One is the financing of public pension (social security in US terms) programmes. The other is paying for healthcare. This paper considers the healthcare issue briefly, emphasising that the issue arises primarily because of advances in medical technology. Better medical technology will improve healthcare in the future, but more advanced technologies also cost more. The focus of the rest of the paper is on the public pension problem. The emphasis is on the early retirement incentives inherent in the provisions of most public pension programmes around the world, the reduction in the labour force participation of older people caused by these incentives, and the large fiscal implication of the inducement of older people to leave the labour force. These results are based on the Gruber,Wise ongoing international social security comparison project. [source] Developmentalism in Korea: A Useful Tool for Explaining the Role of Social Security in the Reduction of Poverty and InequalityASIAN SOCIAL WORK AND POLICY REVIEW, Issue 2 2008Sang Kyun Kim It is conventional wisdom that universalism is more effective than selectivism in addressing the problems of poverty and inequality. In providing income security for the elderly, retirement pensions calculated on the principle of social insurance represent universalism and social assistance benefits on the basis of means-test selectivism. Korea has both a contributory pension scheme and social assistance program for the elderly. The social assistance began in 1961. The contributory scheme, the National Pension, started belatedly in 1988 and its coverage expanded to the entire population in 1999. We can, therefore, expect that the social security system, especially the universal pension scheme based on social insurance, has some positive impacts on the reduction of poverty and inequality. This paper, however, raises doubt as to the conventional wisdom and thus reviews the developmental process of the Korean social security system for the aged. It was found that the dominant ideological controversy revolved, not around universalism versus selectivism, but around the option between developmentalism and other strategies. Our empirical analysis showed that the public pension had little impact on the reduction of poverty and inequality, particularly in comparison with advanced welfare states. This is not surprising at all, since poverty eradication and redistribution were not major objectives of the Korean social security system. The controversy between universalism and selectivism was relatively unfamiliar in the policy process of the Korean social security system. Even though the redistributive effect is getting larger as the National Pension system becomes mature, the developmentalist model has been proved to be a more useful tool for explaining the limited role of Korean social security. [source] PENSION REFORM, POLITICAL PRESSURE AND PUBLIC CHOICE , THE CASE OF FRANCEECONOMIC AFFAIRS, Issue 4 2008Laura Thompson An ageing population and generous public sector pensions have put significant pressure on the funding of the French pension system making a reduction in the scope of state pension schemes imperative. Yet, as public-choice theory would predict, lobbying by interest groups has made reform difficult to achieve. [source] From Bismarck to FriedmanECONOMIC AFFAIRS, Issue 2 2007Kristian Niemietz Chile provides the most frequently quoted example of a change from an established state PAYGO pension system to a privately funded scheme based on personal savings. Most of the key results have been impressive and a lot of the often-heard criticisms of funded schemes have been disproved. A number of shortcomings remain. These shortcomings are seldom caused by features inherent to funded schemes, but rather by elements specific to the Chilean arrangement which could be altered given the political will. [source] Securitization of taxes implicit in PAYG pensionsECONOMIC POLICY, Issue 42 2005Salvador Valdés-Prieto SUMMARY Pay-as-you-go securities To preserve solvency, a pay-as-you-go (PAYG) pension system needs to adjust contribution rates and pension promises over time. Currently, it is not possible to hedge in the financial market against politically determined uncertainty as regards these parameters. I consider a policy reform whereby property rights are established on the implicit lifetime tax levied by PAYG finance, and are assigned to the pension institution. These property rights are well defined if the reform also features rule-based allocation of aggregate risk, in the form of defined-contribution or defined-benefit schemes. I show that a PAYG pension system may indeed be instantly restructured so as to minimize political risk and allow financial-market diversification of risk. A side benefit is securitization of human-capital flows, which are not traded in existing financial markets. The new securities, if traded in appropriately competitive financial markets, are complementary to the Notional Account reforms of the 1990s. However, fiscal instability can increase if securitization is implemented in the absence of initial solvency and credible adoption of rule-based methods to allocate aggregate risk. , Salvador Valdés-Prieto [source] The Reform of Pension Systems: Winners and Losers Across Generations in the United Kingdom and GermanyECONOMICA, Issue 266 2000David Miles In this paper we perform simulations with a stylized model of the United Kingdom and Germany to show which generations might be gainers, and which losers, from a transition from an unfunded to a funded state pension system. We show that it is likely that more than one generation will be direct losers as a result of a transition (especially in Germany). If more than one generation are direct losers, then, in order for those generations not to be net losers, the chain of bequests (in the initial equilibrium) needs to satisfy a simple condition, which we derive and analyse. [source] Public Pension Reform in the United Kingdom: What Effect on the Financial Well-Being of Current and Future Pensioners?,FISCAL STUDIES, Issue 1 2005Richard Disney Abstract Unlike many tax and benefit changes, reforms to public pension programmes take many years to have their full effect. This paper examines the effect of reforms to the public pension programme in the United Kingdom on the state retirement incomes of current generations of pensioners and on the prospective state incomes of future generations of pensioners. We show that, for an individual with lifetime earnings close to male average earnings, the UK pension system is at its most generous to those reaching the state pension age around the year 2000, but that the introduction of the state second pension and the pension credit postpones this peak for individuals on lower incomes and for those with substantial periods out of paid employment spent with caring responsibilities. We also consider how the ,mix' of benefits, particularly between the contributory and income-tested sectors, could change over time, and the impact that this would have on incentives to save for retirement. [source] The Distributional Impact of Pension System Reforms: An Application to the Italian CaseFISCAL STUDIES, Issue 4 2004MARGHERITA BORELLA Between 1992 and 1995, the Italian pension system was deeply reformed, and it is now moving from an earnings-related to a contribution-based scheme. The pre-1992 system was generous and redistributive; however, often redistribution operated from the poor to the rich, notably because the benefit formula was based on the last years of earnings, thus benefiting workers with steep earnings profiles. The new contribution-based scheme may enhance equity by removing (some of) the inequities implicit in the previous system. Simulations calibrated on Italian male employees show that the contribution-based scheme reduces inequality among all groups considered, with the exception of college graduates employed in the private sector. When taking into account the average level of the benefit as well as its distribution, the analysis shows mixed results depending on the worker's number of years of contribution and on their retirement age, as well as on the steepness of their earnings profile. [source] Funding a PAYG pension system: the case of ItalyFISCAL STUDIES, Issue 4 2001Lorenzo Forni Abstract Italy is characterised by a mature pay-as-you-go social security system and by particularly adverse population projections. Given these trends, the social security contribution rate is expected to increase above its current high level. This hinders the development of employer-provided pension funds and introduces a significant wedge between labour cost and earnings that discourages both labour demand and labour supply. Any proposal to reduce payroll taxes and to reform the system in the direction of partial funding has to cope with the state of Italian public finances. Italy has to comply with the Stability and Growth Pact that imposes constraints on budget deficit and debt trends. Using micro data from the Bank of Italy's Survey of Household Income and Wealth and official population projections, we estimate future employment trends under different demographic and macroeconomic scenarios and compute the cost of the transition. We show that it would be substantially reduced if positive effects on employment were induced by the payroll tax reduction. [source] Social Desirability of Earnings TestsGERMAN ECONOMIC REVIEW, Issue 2 2008Helmuth Cremer Earnings tests; social security; age-related taxation; retirement age Abstract. In many countries, pension systems involve some form of earnings test; i.e. an individual's benefits are reduced if he has labor income. This paper examines whether or not such earnings tests emerge when pension system and income tax are optimally designed. We use a simple model with individuals differing both in productivity and in their health status. The working life of an individual has two ,endings': an official retirement age at which he starts drawing pension benefits (while possibly supplementing them with some labor income) and an effective age of retirement at which professional activity is completely given up. Weekly work time is endogenous, but constant in the period before official retirement and again constant (but possibly at a different level), after official retirement. Earnings tests mean that earnings are subject to a higher tax after official retirement than before. We show under which conditions earnings tests emerge both under a linear and under a non-linear tax scheme. In particular, we show that earnings tests will occur if heterogeneities in health or productivity are more significant after official retirement than before. [source] Age-Dependent Taxation and the Optimal Retirement Benefit FormulaGERMAN ECONOMIC REVIEW, Issue 1 2008Mathias Kifmann Optimal taxation; pay-as-you-go pension systems; implicit taxation; intra- and intergenerational equity; financial stability Abstract. This paper presents a comprehensive view of lifetime taxation including both explicit taxation through the general tax system and implicit taxation via the retirement benefit formula. Differences in productivity between individuals are unobservable, which provides a rationale for the use of distortionary taxes. It is shown that the optimal structure of age-dependent taxation can be characterized by a generalized Ramsey formula. Furthermore, the paper derives the optimal retirement benefit formula in the presence of the general tax system and examines the compatibility with the financial stability of the pension system. [source] Pension Reform, Capital Markets and the Rate of ReturnGERMAN ECONOMIC REVIEW, Issue 2 2003Axel Börsch-Supan Aging; pension reform; rates of return Abstract. This paper discusses the consequences of population aging and a fundamental pension reform , that is, a shift towards more pre-funding , for capital markets in Germany. We use a stylized closed-economy, overlapping-generations model to compare the effects of the recent German pension reform with those of a more decisive reform that would freeze the current pay-as-you-go contribution rate and thus result in a larger funded component of the pension system. We predict rates of return to capital under both reform scenarios over a long horizon, taking demographic projections as given. Our main finding is that the future decrease in the rate of return is much smaller than often claimed in the public debate. Our simulations show that the capital stock will decrease once the baby-boom generations enter retirement, even if there were no fundamental pension reform. The corresponding decrease in the rate of return, the direct effect of population aging, is around 0.7 percentage points. While the capital market effects of the recent German pension reform are marginal, the rate of return to capital would decrease by an additional 0.5 percentage points under the more decisive reform proposal. [source] A comparative study of the relationship between pension plans and individual savings in Asian countries from an institutional point of viewINTERNATIONAL JOURNAL OF SOCIAL WELFARE, Issue 4 2010Mann Hyung Hur Hur MH. A comparative study of the relationship between pension plans and individual savings in Asian countries from an institutional point of view Int J Soc Welfare 2010: 19: 379,389 © 2009 The Author, Journal compilation © 2009 Blackwell Publishing Ltd and the International Journal of Social Welfare. This study identifies various saving plans used as alternative pension plans in Asian countries and examines the extent to which these saving plans contribute to their pension schemes. Data were collected from six Asian countries: China, Hong Kong, Japan, Korea, Singapore and Taiwan. The comparison concentrates on an examination of differences and similarities in individual countries' privately managed pension schemes and saving plans. This study suggests that a pension system does not have to be a privately managed plan to encourage individual savings. A critical point for individual savings was avoiding a defined benefit plan. On the basis of these findings, a typology of relationships between second and third pillars and provident funds and incentive systems for individual savings was developed. [source] A great leap towards liberalism?INTERNATIONAL JOURNAL OF SOCIAL WELFARE, Issue 2 2000The Hungarian welfare state The article analyses the changing role of the Hungarian state by examining the principles and boundaries of government commitment in income maintenance. I test the hypothesis that the welfare regime is liberal and is becoming increasingly more so. The empirical analysis addresses three major issues: the reliance on universal schemes in family support, the nature of poor relief assistance, and the institutional structure of the pension system. I find that these different programs do not add up to constitute any specific type of welfare regime. Rather, the emerging, and still transitory welfare system appears ,,faceless''. I claim that a static welfare typology cannot be applied to the Hungarian welfare system and therefore reject the liberal hypothesis. [source] The public pension system in Taiwan: Equity issues within and between systemsINTERNATIONAL SOCIAL SECURITY REVIEW, Issue 1 2010Ai Ju Shao Abstract This article analyses the challenges facing the New Public Service Pension Fund System in Taiwan, China. After less than two decades of operation, this young system is facing financial imbalance and is embroiled in controversy regarding the generosity of its benefits provisions. The article first introduces Taiwan's different systems for old-age security, with a focus on that for general public-sector employees. It then addresses the financial challenges facing the general public-sector pension system, including the rising cost of its benefits for all taxpayers. Finally, a number of possible reform directions are suggested, including lowering benefit levels, making qualifying criteria more stringent, or establishing a new system. With regards to the latter, any proposed new system must seek to satisfy the goal of longer-term financial soundness while realizing optimal fairness among all stakeholders including taxpayers. [source] Reforming pensions: Principles, analytical errors and policy directionsINTERNATIONAL SOCIAL SECURITY REVIEW, Issue 2 2009Nicholas Barr Abstract This article, sets out a series of principles for pension design rooted in economic theory: pension systems have multiple objectives, analysis should consider the pension system as a whole, analysis should be framed in a second-best context, different systems share risks differently, and systems have different effects by generation and by gender. That discussion is reinforced by identification of a series of widespread analytical errors , errors that appear in World Bank work, but by no means only in World Bank work: tunnel vision, improper use of first-best analysis, improper use of steady-state analysis, incomplete analysis of implicit pension debt, incomplete analysis of the impact of funding (including excessive focus on financial flows, failure to consider how funding is generated, and improper focus on the type of asset in trust funds), and ignoring distributional effects. The second part of the article considers implications for policy: there is no single best pension design, earlier retirement does little or nothing to reduce unemployment, unsustainable pension promises need to be addressed directly, a move from pay-as-you-go towards funding in a mandatory system may or may not be welfare improving, and implementation matters , policy design that exceeds a country's capacity to implement it is bad policy design. We illustrate the ranges of designs of pension systems that fit the fiscal and institutional capacity constraints typical at different levels of economic development. The potential gains from simplicity imply that a country capable of implementing an administratively demanding plan does not necessarily gain from doing so. New Zealand has a simple pension system through choice, not constraint. [source] Assessing gender inequality in the Turkish pension systemINTERNATIONAL SOCIAL SECURITY REVIEW, Issue 2 2008Adem Y. Elveren Abstract Since the 1990s, the welfare regime in Turkey has become more market-oriented. The introduction of the Individual Pension System (IPS), a privately managed defined contribution scheme, is part of this process. This paper uses an autoregressive stochastic model in order to show the total effect of specific disadvantages, such as a shorter working life, less earnings, longer life expectancy, real wage growth, administrative cost and risk aversion, on the retirement benefits of women in Turkey. Using an actuarial model, the article aims to contribute to the literature by investigating the gender gap in the Turkish defined contribution scheme. [source] Designing a social security pension systemINTERNATIONAL SOCIAL SECURITY REVIEW, Issue 1 2008Robert L. Brown It refers often to the systems that exist in the United States and Canada (the latter more particularly) to outline the issues involved in attempting to design a "good" social security pension system. Of course, one of the issues is the definition of "good". This paper will use criteria such as poverty alleviation, retirement income adequacy, benefit/contribution sustainability, income equality and wealth distribution. In the course of the discussion, the reader will be exposed to many issues that need to be addressed in the establishment of any social security pension system in the world. This may prove to be helpful in countries where new systems are established (and even for evolving systems). It is also hoped that future students of social security will find this paper helpful in that it is meant to lay out some basic principles consistent with good social security pension design. [source] Distributional Impacts of Pension Policy in Argentina: Winners and Losers within and Across GenerationsINTERNATIONAL SOCIAL SECURITY REVIEW, Issue 3 2006Camila Arza The paper deals with the life-cycle intra- and intergenerational income transfers operated by the pension system in Argentina by estimating the internal rates of return obtained by different generations and types of workers from their participation in the system. The empirical analysis confirms that earlier generations of workers benefited from higher social security returns than later generations, which retired under a matured system with large deficits. The worst-affected cohorts were those born after 1920, particularly suffering from a social security crisis and falling real wages. For future generations retiring fully under the new mixed pension system, returns will more closely depend on financial market performance and the evolution of administration costs. Intragenerational transfers were also observed for all cohorts under study, as a result of the original system design as well as adjustments adopted during the implementation process. The real distributional impact of progressive benefit formulas could, however, be offset by state transfers to cover pension deficits and forward tax shifting in a context of unequal pension coverage. [source] Rethinking Social Security in Latin AmericaINTERNATIONAL SOCIAL SECURITY REVIEW, Issue 2-3 2005Indermit Gill In the past decade, many Latin American governments have radically restructured their old age income security systems, following the lead of Chile, which undertook its major pension reform in 1981. The defining characteristic of the reforms has been a shift in the basis of public pensions from social to individual responsibility: instead of the widely used system that "collectivized" or pooled the risk of being without the capacity to earn while aged, numerous countries in the region have adopted a system that relies on individual savings accounts. The reforms have maintained a role for a modified version of public pooling; this combination of individual and social savings to finance pensions is known as the "multipillar" approach. This article is based on a report prepared for the Office of the Chief Economist of the Latin America and Caribbean Region of the World Bank (Gill, Packard and Yermo, 2004).1 The report recognizes that the system of individual accounts, the essential aspect of the reform, has been a necessary and positive development, and one that is consistent with the economics of insurance and social welfare objectives. Beyond this recognition, however, the results of reform are much more complex. Each country has implemented its own version of the multipillar system. The article therefore draws on country evidence in order to determine: How has the new approach to public pensions in Latin America fared? In particular, have the changes left workers and their families in reform countries better off? The first section provides a brief description of the reforms. The second discusses the main macroeconomic concerns and effects. The third describes the impact on coverage levels, and other social welfare implications. The fourth evaluates the stagnation of coverage levels and presents various possible explanations. The fifth makes specific proposals to improve the multipillar pension system in Latin America. The last section concludes. [source] The recalibration of the Danish old-age pension systemINTERNATIONAL SOCIAL SECURITY REVIEW, Issue 2 2003Niels Ploug Pension reform in Denmark in the 1990s is of general interest owing to the development of a system of funded, defined contribution pension schemes based on collective agreement between the parties in the labour market. The resulting pension system seems to hold some answers to the critique of funded pension schemes. This paper analyses the process which led to the 1991 pension reform and relates the discussions and solutions found in Denmark to the international debate on pension reform. [source] Old age protection in India: Problems and prognosisINTERNATIONAL SOCIAL SECURITY REVIEW, Issue 2 2002Ranadev Goswami This paper reviews the current state of the Indian pension system. The Indian experience could potentially influence policy decisions in other developing countries, especially those with similar reliance on the national provident fund system. Institutional features of various retirement benefit schemes are highlighted and their deficiencies are discussed. It is argued that low coverage level, underperformance of provident fund schemes due to investment restrictions, and financial difficulties in administering unfunded public pension programmes have rendered the current system ineffective and unsustainable. The failed experiments with ad hoc reform initiatives in the recent past further emphasize the need for a structural and lasting change. The paper concludes with some policy directions for reforming the Indian pension system. [source] Voting on Pensions: A SurveyJOURNAL OF ECONOMIC SURVEYS, Issue 2 2005Grégory De Walque Abstract., The paper presents a nonexhaustive survey of the literature designed to explain emergence, size and political sustainability of pay-as-you-go pension systems. It proposes a simple framework of analysis (a small, open, two overlapping generation economy model), around which some variants are displayed. Dictatorship of the median voter is assumed. The text is organized to answer the following questions: (i) Do political equilibria with PAYG pension schemes exist? (ii) Why do they emerge? (iii) What are the conditions for the participation constraint of the pension game to be verified?, and finally, (iv) What is the size of the pension system chosen by the median voter and how is this size influenced by an exogenous (e.g. demographic) shock? [source] The Political Power of the Retirees in a Two-Dimensional Voting ModelJOURNAL OF PUBLIC ECONOMIC THEORY, Issue 4 2003Georges Casamatta We show that the retirees are able to obtain favorable pension policies whereas they belong to a minority in the population. The argument relies on the multidimensional nature of the political process. We consider a two-dimensional collective choice problem. The first of these choices is the level of the contribution rate to the Pay-As-You-Go pension system. The second is a noneconomic decision, unrelated to the pension system. Using a political agency model, we show that, as soon as the retirees are sufficiently numerous, the equilibrium tax rate may be higher than the tax rate preferred by the young, who yet constitute a majority over the pension issue. [source] |