Comparing the Pension Promises of 30 OECD Countries

This paper takes a microeconomic approach to compare prospective pension benefits in the 30 OECD countries. It shows entitlements gross and net of taxes and social security contributions for male and female single workers based on 2002 pension rules and parameters. The models cover all public and private mandatory sources of retirement income for full‐career private‐sector workers across a broad earnings range. The paper shows that average earners in OECD countries can expect a post‐tax pension of about 70 per cent of their earnings after tax. The average minimum retirement benefit is just under 29 per cent of national average earnings.     

Special pension schemes for workers in arduous and hazardous jobs: Functions and conditions to ensure equal treatment

Most jurisdictions grant differentiated and more beneficial treatment – usually in the form of early retirement, and commonly under special pension schemes – to workers in arduous or hazardous jobs. Several justifications for such treatment have been advanced, including i) compensating the worker for the hardship, ii) protecting the worker from the hazard, and iii) realizing the principle of equality in the distribution of costs and benefits in the social security system. This article analyses these functions from a socioeconomic perspective and explains how early retirement for workers in arduous and hazardous jobs is necessary to ensure equality by treating “unequals unequally”, and in proportion to their inequality. Moreover, this article presents a precise formula to calculate when a worker should be allowed to retire, so that workers in occupational domains with a shorter life expectancy do not systematically enjoy lower expected benefits from the pension system while having contributed the same amount. Implications for the design and desirability of special pension benefits are discussed.     

Pension systems and prospects in Asia and the Pacific

There is a diversity of pension systems in the Asia and Pacific region. A growing number of countries have social insurance pension schemes, but many others which have provident funds have not set up any mandatory pension system at all. Demographic, social and economic changes mean the need for a regular income in old age will increase enormously. Existing schemes should be extended to all employees, benefits should meet certain minimum standards, administrative arrangements must adapt to structural change, and the budgeting both of governments and of households must be adjusted to take account of changing age dependency ratios.     

Notional defined-contribution schemes: Old wine in new bottles?

Until recently, most pension benefit formulae in social security schemes resembled each other. They were all defined-benefit formulae that were either generous or mean, while defined-contribution formulae were exclusively used in private and occupational pension schemes and some national provident funds. Then came the mandatory retirement savings model, introduced in Chile and subsequently in other Latin American countries. It did not seem possible that such a formula could be used on any large scale in the pay-as-you-go environment of OECD pension schemes. In the early 1990s, however, Swedish social security experts devised the notional defined-contribution (NDC) system: individual social insurance pension contribution records are converted into a fictitious savings amount at retirement, whereupon the defined-contribution approach is followed. This article analyses how much of this approach is new. The conclusion is that it is a novel pension policy instrument rather than a new type of pension formula, and most of its potential financial and distributive effects could also be achieved by a classical, linear defined-benefit formula. It is the packaging that differs and, in politics, that often is what matters.     

Income security for older people: An Asian perspective

In Asia and the Pacific, as in other developing regions, the continuing growth of the aged population has a great impact on social security programmes generally and, in particular, on the income security of older persons. In societies where traditional support systems are breaking up, their need for social security protection is increasingly important. A system of social security for the elderly population exists in most countries of the region. Many are provident fund schemes, which are basically saving schemes, and their coverage is low. Where social insurance pension schemes exist, the levels of benefits provided are also low. The focus for future development, therefore, lies in converting the savings schemes into multitiered pension schemes, extending their coverage and raising the level of benefits. In this context the critical question concerns the role of the State and the type of schemes used. The need for public pension schemes is great in Asia and the Pacific, where the level of poverty is comparatively high. Building pension schemes, whether public or private, involves a set of issues that need to be addressed. This article considers the systems currently in place and the challenges and limitations faced when considering the future development of social security in this area.     

The Political Economy of Pension Reform in Eastern Europe

The retirement schemes in several East European countries underwent fundamental change in recent years, defying conventional wisdom in welfare state research. This article takes a new look at the determinants of paradigm choice in the area of old-age security, comparing the Polish, Hungarian and Czech experience from an actor-centred institutionalist perspective. The author points out that structural factors — notably the financial situation of retirement schemes and the level of external debt — largely determined the set of main pension reform actors, as well as their relative strength. The resulting actor constellations produced the basic paradigm choice, based on the actors' respective cognitive maps and consequent perception of pension reform alternatives. Tactical moves and the strategic potentialities of the chosen paradigm were also relevant.     

Complementary retirement pensions: Towards a definition of terms

One of the main difficulties in carrying out an international comparison of retirement systems is the task of establishing clear common terminology. Like other social institutions, welfare systems differ from country to country; confusion can arise when a given word is applied to different institutional structures because such usage can mask important differences. On the basis of a comparison of complementary pension plans in the United States, Ireland, the United Kingdom, France and Germany, this paper discusses and clarifies the meanings of some key terms. The distinction between "private" and "public" retirement plans, commonly used by Americans, can be erroneously applied to other systems, particularly that of France, where complementary retirement plans resemble American "private" plans in some respects and "public" plans in others. The terms "occupational" and "supplementary", often used in Europe, can be used interchangeably; however, each one stresses different aspects of complementary plans. The terms "funding" and "pay-as-you-go" and their equivalents in French (répartition and capitalisation) have somewhat different meanings and quite different connotations. Finally, the author discusses the concept of "social insurance", as applied to both social security and complementary pension plans, to end with some reflections on the definition of what constitutes a retirement plan.     

The Changing Conception of Pension Rights in Canada, Mexico and the United States

Relying on four conceptualizations of the welfare state (universalism, redistribution, state capacity, and intergenerational equity), this article presents an overview of recent pension reforms in Canada, Mexico and the United States. Each country has introduced important reforms in the past 25 years and is currently engaged in debates to make other adjustments. The state is reducing its financial and programmatic commitment towards current and future retirees and is promulgating reforms tightening the link between contributions and benefits. In Canada, the government raised contribution rates substantially to maintain the same level of benefits while it sought to alter its universal flat-rate benefit. In the USA, changes to Social Security have resulted in a higher retirement age and lower replacement rates. In the case of Mexico, the most important public schemes have actually been privatized.     

外部环境视角下我国企业年金发展影响因素分析

影响企业年金发展的因素是多方面的,有宏观的外部因素,也有企业年金自身制度内部因素。本文将我国企业年金发展纳入我国社会保障体制中,综合考量基本养老保险、劳动力市场状况、收入分配体系等外部环境对企业年金的影响,为进一步加快企业年金发展提出建议.     

Pan‐European pension funds: Current situation and future prospects

The competitive pressures arising from European economic integration increasingly challenge the territorial sovereignty of national welfare states. This generates the need to situate domestic social security schemes amid the European Union's national and supranational as well as economic and social spaces. At the trans‐national level, the European Commission's 2003 Institutions for Occupational Retirement Provision (IORP) Directive created the illusion that a single market for occupational pensions would shortly be within reach. This did not happen, however, as IORPs — being at one and the same time financial vehicles and social insurance institutions — embody the constitutional asymmetry between policies promoting market efficiency and policies promoting social protection. Whereas the elimination of financial and tax barriers has proceeded smoothly, harmonization of the social and labour components within the occupational pension domain did not occur, slowing down the development of pan‐European pension plans. Nonetheless the road towards a single occupational pension market is still open, with first positive results emerging from the greater involvement of corporate and supranational actors.     

The Politics of Public and Private Pension Generosity in Advanced Democracies

The quantitative strand of social policy research suffers from a triple deficit: analyses of aggregate expenditure dominate, most of the few studies of replacement rates focus on unemployment or sickness benefits while pensions are excluded, and the interdependence between public and private pension plans is often ignored. This article addresses the said deficits, first, by discussing the pension sectors' theoretical peculiarities and by proposing two hypotheses: one on the role played by political parties in implementing public pension retrenchment, and the second on their role in extending private pension plans. Second, the article presents regression results of public pension replacement rate changes in 18 developed democracies. The findings show considerably smaller cuts to pensions than to unemployment or sickness benefits, and striking differences regarding partisan effects between the sectors. Lastly, the article assesses partisan effects on private pension plans, detecting some rather surprising effects. Most noteworthy is the fact that those parties which reduced public pension generosity during the 1990s (i.e. Social Democrats) cannot claim responsibility for compensating these cuts by eliciting higher private engagement.     

人口老龄化趋势下我国农村独生子女家庭养老困境及破解

农村独生子女家庭是一个特殊的社会群体,他们为中国的计划生育做出了重大贡献。但是,这一群体目前日益步入老龄化,他们的养老面临一系列困境,如:独生子女家庭养老的经济负担普遍较重,附加于计划生育政策上的政策性保障有限,养老风险较大,家庭养老功能弱化,社会养老功能不健全等等。为此,建议设立农村独生子女家庭养老专项基金,以减轻独生子女养老的经济负担;独生子女父母要加强自我养老意识,为自我养老创造条件;加大社会养老机构建设力度,应对未来不断增多的独生子女家庭养老挑战;发展壮大集体经济,建立健全社区养老服务体系,使其逐渐成为家庭养老的可替代性选择等。     

Pension scheme fees and charge ratios in 44 countries: A comparative study

Based on data received from pension supervisory authorities, the article reviews 85 different pension schemes in 44 jurisdictions by looking at fees and charges as well as their legal ceilings and their development since 2014. A key finding is the observed decrease in fees and caps. The article presents jurisdictions according to clusters, i.e. by groups of countries with identical or very similar items already covered by pension fees, and analyses the extent to which various cost and fee elements are covered by fees charged to members. Finally, we calculate charge ratios for each cluster to quantify the impact of fees and charges on pension savings. Occupational defined contribution pension schemes and personal plans linked to employment tend to be much more cost effective than personal schemes that have no direct employment link.     

Pension Provision for Specific Risk Groups: The Japanese Case

The growing variety of possibilities in one life course raises coverage, fairness and social adequacy questions about existing public pension provision. This paper examines problems of drop-out, full-time housewives, carers, divorced or remarried people and those engaged in atypical work in Japan. A possible solution will be a universal basic pension financed by a consumption-based tax. It is also advisable to expand social security coverage of the earnings-related pension to any earners irrespective of their earnings amount, if any. In implementing this provision, an integrated single social security pension number for each person is required, and this has already been introduced in Japan. The 1999 government reform plan for pensions is also mentioned.     

Developmentalism in Korea: A Useful Tool for Explaining the Role of Social Security in the Reduction of Poverty and Inequality

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.     

"Risk" and UK Pension Reform

“Risk” is a word that has become common currency in the financial services industry in general, and in the pensions industry in particular. This article critically examines its use in the context of the current debate about UK pension reform. “Risk” is used by a broad spectrum of interests to discuss a wide range of pension issues in a variety of contexts. The article outlines key theoretical perspectives on the nature and construction, or conceptualization, of risk. Their relevance to debate and policy initiatives, particularly public pension policy, is examined. It is suggested that current government policy is failing to carry with it those to whom the policy applies; that reforms implicitly, if not explicitly, underestimate the importance of “security”; and that failure to conduct a much broader debate about the fundamental notions of work, retirement, saving and security may simply condemn the UK to interminable pension reform.     

Contributions‐financed cash benefits: Selected examples of tiered pension systems

This article addresses the link between pensions and occupational earnings using the example of social security contributions in selected OECD countries. The rules of the pension schemes studied point towards a very strong link between occupational earnings and pension level. However, certain pension calculation methods, through pension calculation parameters or through the existence of tools to compensate for certain career discontinuities, may distort this link in the majority of the countries studied. Therefore, the examination of pension calculation parameters and of solidarity measures attached to retirement is necessary to provide a more finely‐tuned evaluation of the link between occupational earnings and pension level. Ultimately, comparison of pension systems across countries remains challenging given their specificities.     

Extending coverage under the Argentinian pension system: Distribution of access and prospects for universal coverage

One of the main challenges facing social policy in Latin American is to guarantee social security coverage for the entire population in the presence of a large informal sector. In Argentina, a regional pioneer in terms of the development of its pension system, more than one third of those of retirement age were without benefits in 2005. Since then, considerable progress has been made in extending coverage thanks to the introduction of a programme that has reduced contribution requirements and allocated benefits to a large number of seniors previously excluded from the system. This article analyzes the impact of this process in Argentina on the level and distribution of coverage, identifies changes in socio‐demographic factors which affect inclusion/exclusion in the social security system, and discusses remaining obstacles to the provision of universal coverage in the medium and long term.     

An Analysis of Selected Pension and Health Care Initiatives for Informal Sector Workers in India

India's demographic trends portend moderately rapid ageing of the population. This, combined with the limited coverage of pension and health care programmes in terms of population, types of risks covered, and benefit levels has led to greater urgency in extending the coverage and reform directions of the current pension and health care programmes. This article analyses three pension and health care initiatives in India directed at the workers and their families engaged in the informal sector. The first initiative, India's National Social Assistance Programme (NSAP), undertaken in 1995 provides budget‐financed transfers targeted at older persons. It is funded by the Union government but implemented by the state governments. The second initiative, called Swavalamban, was started in 2010, but has been subsumed under Atal Pension Yojana (APY), in the 2015–16 budget. Both are voluntary co‐contributory initiatives aimed at providing access to retirement income to low‐income individuals (government co‐contributing with the individual). Unlike Swavalamban, the APY initiative has provisions for minimum guaranteed pension benefits, with contributions required by the members adjusted accordingly. Effectiveness in increasing enrollment and in sustaining contributions over a longer period will impact on the extent of retirement income security obtained by the members. The third initiative, Rashtriya Swasthya Bima Yojana (RSBY), is insurance‐based and aims to provide hospital care to low‐income households. The article argues that for improving outcomes of these initiatives, more effective implementation, greater fiscal resources, and an integrated and systemic approach which is aided by technology‐enabled platforms such as Aadhaar, will be needed.     

Pension Reform in the EU Accession Countries: Challenges, Achievements and Pitfalls

Like the current member States of the European Union (EU), the 13 accession countries have diverse pension systems that vary in the adequacy of benefits, the degree of solidarity, and the roles of government, workers, employers, and pension funds in scheme management. Since the mid-1990s, nearly all have increased their pensionable age and adopted new systems for voluntary supplemental pension savings. Five have scaled down their social insurance schemes in favour of new systems of commercially managed individual savings accounts. The article discusses these reforms and their match with key elements of the countries' political and economic environments, financial markets and regulatory experience. It highlights alternative approaches to pension protection for retired workers in conditions of ageing populations.