F.T. Denton and B.G. Spencer
Canadian Public Policy, vol.37, 2011, p. 183-199
Canadians are living longer but retiring younger. This means that the proportion of the population that is economically inactive is increasing, giving rise to concerns about the possibly large increases in the burden of support that will fall on those of working age. This article explores, using a simplified but relevant model, the impact that continued gains in life expectancy will have on the size of the population eligible for public pension benefits. In doing so, special attention is given to possible increases in the age at which people are eligible to receive benefits, the impact of this on the size of the future labour force, the changing ratio of working age population or labour force to retired population, and the pension contribution rate that would be required to maintain the publicly financed component of the retirement income security system.
S. Sahin and A.Y. Elveren
International Social Security Review, vol. 64, no.3, 2011, p. 39-61
Guaranteeing a minimum pension for participants in defined contribution private pension schemes has emerged as a major tool for avoiding the risk of stock market fluctuations. A minimum pension guarantee provides a minimum annuity regardless of the actual investment performance of individual accounts. This article presents a cost analysis of a minimum benefit guarantee mechanism for the voluntary Individual Pension System in Turkey. It examines cost estimates and the probability of providing guaranteed payments under various economic and demographic assumptions.
Pensions, vol.16, 2011, p. 75-79
Earnings-related pension schemes in Europe are in deep crisis as a result of the toxic mixture of population ageing, the 2008/09 financial crisis, and poorly functioning labour markets. This article describes the roles of the financial sector, national governments, employers and the EU in addressing the challenges. Governments should mandate their citizens to save for retirement and facilitate inter-generational risk sharing by issuing wage-indexed and longevity bonds. The financial sector needs to offer better retirement plans. The EU should facilitate pension innovation by encouraging member states to learn from each other and foster the development of the internal market for pension products and services. Finally, employers should develop and maintain human resources better, so that people can work for longer.
International Social Security Review, vol. 64, no.3, 2011, p. 81-98
In 1998 the left-of-centre government in Hungary introduced a mandatory second-pillar private pension scheme alongside the original public pension system. Due to the impact of the global financial and economic crisis, in 2010 a conservative Hungarian government suspended private contributions and then introduced reforms that will in effect close down the mandatory second pillar. It intends to use part of the accumulated pension capital to reduce Hungary’s excessive public debt and annual budget deficit and to finance income tax reductions.
International Social Security Review, vol. 64, no.3, 2011, p. 65-80
The transnational campaign for pension privatisation is in crisis following the financial crash of 2008/09. However the trend towards funded pensions has not gone away and the spirit of privatisation is not dead. Countries may move away from mandatory, individual private pensions that were the centrepiece of the previous World Bank campaign, but the coming years will see the rise of a variety of other models. These include ‘funded’ minimum pensions (i.e. tax financed and/or pre-funded using a sovereign fund type mechanism) and nudge-type automatic enrolment in pension schemes as well as notional defined contribution and quasi-mandatory occupational pensions. Global pension policy has shifted from an emphasis on harnessing free market wizardry to controlling costs through raising the pension age, better coverage of the poor, and nudging people to save rather than mandating them to do so.
L. Ferruz Agudo and M. Alda Garcia
Pensions, vol. 16, 2011, p. 96-106
In Western countries population ageing, shorter working lives and longer retirement periods have undermined the stability of public pension systems and resulted in complementary private and occupational schemes becoming more important. This article examines the reforms to the Italian pension system introduced in the 1990s. A mixed system was adopted which made contributions to occupational pension schemes compulsory. The reforms reduced the pressure on the pay-as-you-go funded state pension scheme and stimulated investment in private pensions despite the 2008/09 economic crisis.
China Journal of Social Work, vol. 4, 2011, p. 175-181
The pension system in China developed from the 1980s through targeting the needs of different social groups. It began with the introduction of the urban employees’ basic pension insurance and the implementation of a rural insurance scheme based on individual contributions in the mid 1980s. In 2000, the government set up a national social security reserve fund in anticipation of pressures on the pension system due to population ageing. After briefly outlining the challenges facing the Chinese pension system, the author goes on to propose reform strategies, including: 1) harmonising the urban and rural pension insurance systems; 2) increasing state involvement in financing pension insurance schemes; 3) centralising the management and investment of the pension insurance funds; 4) expanding the national social insurance strategic reserve fund; and 5) strengthening the regulation and supervision of all types of pension insurance fund investment and operation.
Pensions, vol.16, 2011, p. 127-136
In 2009 Ghana introduced a three-tier pension system comprising a mixture of pay-as-you-go social insurance and mandatory and voluntary private pension pillars. This article examines the three-tier scheme, focusing mainly on the extent to which risks associated with decentralised and competitive pension programmes are addressed. It shows that although private pensions have been presented as instruments for giving workers and pensioners choice and control over retirement decisions, as well as a mechanism for capital market development through individual savings, they also expose participants to threats of income insecurity in old age. Ghana lacks a financial market to hold and invest pension funds, and entrusting people’s old age income security into the hands of private fund managers has implications for the protection of pensioners.