Voluntary Pension Saving for Old Age: Are the Objectives of Self‐responsibility and Security Compatible?

Fiscal pressure and demographic change lead governments to seek ways of reducing state expenditure on pensions. Individuals are asked to take more responsibility, and funded, supplementary pension schemes have been established in many countries. This article looks at schemes that are voluntary – the NEST or Personal Accounts scheme in Britain and the Riester Pension scheme in Germany. It examines the debate about whether it is worthwhile for some people to participate in pension schemes that are not mandatory – particularly those with low incomes and/or potentially broken careers. The small pensions they accumulate in such schemes merely offset entitlements to means‐tested pension benefits, leaving them no better off in old age. Concerns about the behavioural consequences of pension means‐testing are not new. Nonetheless, few policymakers have been willing to look at when and how such concerns were expressed in the context of voluntary pension savings. Equally, they have seldom been prepared to explain the costs involved in guaranteeing savings‐based pensions or the implications that the lack of offering such a guarantee might have for individual behaviour. The state has sought for people to take greater ‘self‐responsibility’ for their retirement income, but many people wish for some certainty with respect to the pensions they can expect. These goals might well be in conflict. Whether the ‘state pension for the 21st century’, as proposed by the UK government, will succeed in satisfying the objectives both of the state and of pension savers remains an open question.     

Old age protection in India: Problems and prognosis

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.     

China’s development of a multi‐tier pension system

China has made a number of major changes to its pension system in the period 2014–2020, and is in the process of establishing a multi‐tier old‐age pension system, consisting of programmes provided by the government, voluntary programmes provided by enterprises, and voluntary programmes established by individuals. Policy objectives are to reduce the fragmentation in its pension system; deal with population ageing; and diversify risks by involving the government, enterprises as well as individuals. This article shows that while China has a complex system for urban workers, the coverage provided by its multi‐tier system is uneven, with the second and third tiers being in the early stages of development.     

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.     

The challenge of pension reform in Georgia: Non‐contributory pensions and elderly poverty

Georgia's national social security system offers almost universal non‐contributory basic pension coverage. The basic pension has, to date, proved effective in dealing with old‐age poverty. But Georgia's fiscal constraints and ageing population also highlight the importance of improving the pension system, in order to ensure its sustainability. This article presents policy reform choices, which suggest that, in Georgia, pension reform might include increasing the statutory retirement ages and reducing the generosity of benefits through means testing. The case of the Georgian non‐contributory basic pension might hold value for some low‐ and middle‐income countries that are considering the implementation of, or expanding coverage under, a non‐contributory pension programme.     

"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.     

Extending social security coverage to the rural sector in China

In late 2009 China launched an innovative, voluntary programme that by 2011 had extended pension coverage to 326.4 million people in the rural sector, including contributors and beneficiaries. It requires one contribution per year and provides a flat‐rate benefit and a contributions‐related benefit through a contributory individual account, with a government guarantee that the benefit will continue for life. The programme encourages participation of persons who do not pay income taxes, and thus have no tax incentive to participate, by providing substantial government subsidies. As a further incentive, old‐age benefits are provided to older parents when all their adult children participate in the contributory programme.     

Japan's never–ending social security reforms

This paper examines implications of the 2002 population projections for future trends in pension and healthcare costs in Japan. Current redistributive pension and healthcare programmes have resulted in considerably higher per capita income for the aged than the non–aged population. Substantive reforms are needed to lessen the extent of such redistribution, but political considerations have meant that only incremental reforms have been feasible. A start, however, has been made on introducing private initiatives in pensions; and shifting from the command and control model operated by the central government to a contracting model for healthcare.     

Updating the Debate on Intergenerational Fairness in Pension Reform

This article examines the arguments involved in claims about the fairness or unfairness of government policies that would require current working generations to bear the full impact of their lower fertility on the costs of retirement pensions. The analysis is set in the context of a wider review of debate on the role of the idea of generational fairness in assessing options for reform under conditions of population ageing. The article considers three questions: whether generational fairness poses a serious problem for pay‐as‐you‐go pension schemes; whether it is reasonable to assess the generational fairness of pension policy in isolation from other kinds of generational transfer; and whether there is a good case for redistribution from future generations in favour of the baby boom generation.     

Lessons from China on different approaches to pension coverage extension

Achieving universal pension coverage is both an aspiration and a challenge for many developing economies. Traditional contributory schemes are less effective in extending pension coverage to workers who are not in the formal sectors of the economy. As an alternative, non‐contributory schemes have gained popularity in recent years. China’s pension reforms mirror this global trend. The introduction of a contribution‐based pension scheme for urban employees (Employees’ Pension) was followed by a scheme for rural and urban residents (Residents’ Pension), which is partly government financed and partly contributory, with multiple options for premium payment. This study uses nationally representative survey data collected in 2016 to compare the inclusiveness of the two schemes. It finds that access to the Residents’ Pension scheme is more equal than the Employees’ Pension. Lower status workers in terms of education, employment, income and hukou‐migration are more likely to participate in the Residents’ Pension as opposed to the Employees’ Pension, compared with higher status workers. The Chinese experience suggests that a workable solution for pension extension in low‐ and middle‐income countries is to have a scheme that is flexible, affordable and responsive to the diverse needs of the population.     

Inequity in access to the Argentinian pension system (1994–2017)

Pension coverage in Argentina is inequitably distributed between different income levels, both during working years and during retirement. The objective of the article is to study the evolution of inequity in access to the Argentinian pension system in terms of its association with the socio‐economic status of individuals during the period 1994–2017. An evaluation is offered of how variables such as sex, age, and educational attainment influence such inequity. It is concluded that, although the level of average coverage increased, inequity in access increased significantly in the years following the 1994 reform, both among the active and the inactive population. However, inequity in access among active persons did not improve substantially with the return to the pay‐as‐you‐go pension system, while it was considerably reduced among the inactive population. While the former are found to be affected to a greater extent in terms of coverage as a result of the pro‐educated bias among the active population, the latter outcome is thought to be a direct result of the transitory plan (Pension Inclusion Plan) for pension inclusion, after which inequity was to resume its upward course.     

Social security reforms in Kenya: Towards a workerist or a citizenship‐based system?

With social security provisions in Kenya remaining under‐reported in the more recent literature, this overview covers recent reforms in key areas of the country's social security system. In the health sector and in old‐age pension provision social security is still mainly workerist (biased toward those in formal employment), and attempts to expand coverage have had limited effect only – cash transfer programmes, for instance, have been expanded but in practice they do not universally cover the entitled categories. Thus, although the Kenyan social security system now has a considerable pro‐poor social assistance component it remains biased toward those in formal employment, to the benefit of the highest income quintile.     

国有大型企业退休职工的生活现状——基于河南SM集团的调查

本文通过对SM集团这一大型工业纺织国有企业退休职工的抽样调查,分析了SM集团退休职工的生活状况、健康医疗状况、对国家养老相关政策的态度、受企改的影响以及在这些方面存在的问题,并将其与行政事业单位退休职工做对比,在此基础上提出了一些对策和建议。     

Pension Reforms in Europe and Life-course Politics

In recent years, somewhat drastic pension reforms have taken place in all European countries. The pension systems developed in the last century are no longer considered to be suited to the changing demographic constellations in European countries, and the financial sustainability of these systems is under threat. Moreover, the changing political and economic set‐up in European countries is also used to justify reforming the different pension systems. Different reasons can be given to explain the various pension reform measures without, however, there being any integrated coherence. We suggest that a politics of social policy, and of pension policy in particular, based on a life‐course perspective, facilitates the understanding of the whole range of pension reform measures. In the past, the elaborated pension systems were attuned to a normative standard biography. A new standard biography, with different phases and more transitions and combinations, enables one to understand the variety of the ongoing pension reform measures. Such a life‐course perspective integrates sequences of learning, working and caring considered necessary for the polity. In other words, it is based on a conception of human potential, and it integrates, to some extent, the previously separate domains of labour market policy, education policy, care policy and pension policy. However, recent theoretical and empirical studies of the life course lead to a critical evaluation of the new standard biography, with the conclusion that the new standard is one‐sided and scientifically unsound, entailing challenges for social policy.     

Social security coverage extension: A review of recent evidence

This article reports the findings of 13 studies undertaken as part of the International Social Security Association (ISSA) project on “Examining the existing knowledge on coverage extension”. It reviews recent evidence that highlights how cash benefits and health‐care coverage, financed on the basis of contributions or tax revenue or both, can be extended and maintained in low‐, middle‐ and high‐income countries. The article also highlights a number of priority areas and issues for coverage extension, including realizing improved protection for informal‐economy and migrant workers.     

The mandatory private pension pillar in Hungary: An obituary

In 1998, the left‐of‐centre government of Hungary carved out a second‐pillar mandatory private pension scheme from the original mono‐pillar public system. Participation in the two‐pillar system was optional for those who were already working, but mandatory for new entrants to the workforce. About 50 per cent of the workforce joined the second pillar voluntarily and another 25 per cent were mandated to do so by law between 1999 and 2010. The second pillar has not improved the financial stability of the social security system. Moreover, the international financial and economic crisis has highlighted the transition costs that are associated with moving, even if only partially, to a system of pre‐funding. In 2010, the conservative government de facto “nationalized” the second pillar, and it is to use part of the accumulated pension capital to reduce Hungary's excessive public debt and annual budget deficit and to compensate for income tax reductions.     

The interaction of pillars in multi‐pillar pension systems: A comparison of Canada,Denmark, Netherlands and Sweden

Canada, Denmark, the Netherlands and Sweden have advanced multi‐pillar pension systems. Using micro‐simulations, this article presents a close examination of the interaction of pillars in these countries. The relative importance and the role of the different pension pillars vary from country to country, and according to age, income, gender and socio‐economic dimensions as well as between generations. A further area of investigation is the mitigation capacity of the four pension systems. On the one hand, adverse labour careers lead to lower life‐time earnings and lower private pension accruals. On the other hand, these effects are mitigated through the design of pillars and their interaction. Mitigation is important to income security and stability in retirement and to post‐retirement income distribution. However, mitigation mechanisms come at the cost of incentives. Moreover, in many countries, the generosity of public benefits is set to decrease – increasing the importance of private pensions. This will shift risk and uncertainty from employers and pension institutions to individuals. Thus, risks and uncertainties related to private pensions will become more important, raising questions about the division of responsibilities between public and private pensions, and about the potential of mitigating such risk through pillar interaction. These concerns are further reinforced by labour market changes. Although a pension system free of distortions is inconceivable, this article seeks to contribute to addressing how mitigation should be designed, and how mitigation and risk sharing should be balanced against incentives, challenges which are as much political as technical.     

Defamilization/familization measures and women's pension income—The case of Taiwan

This paper examines how defamilization and familization measures can affect women's capacity to accumulate pension income and their subsequent standard of living after retirement. Firstly, it highlights the concepts of defamilization and familization and discusses the potential of these measures in assisting women to save pension income through the “commodification” and “decommodification” of labor. Secondly, it examines the major pension policies and examples of defamilization and familization measures in Taiwan. It shows how the current limited provision of such measures could create “double jeopardy” for women, affecting access to paid employment or resources to enable women who wish to undertake caring responsibilities to do so, ultimately impacting their capacity to accumulate pension income. Thirdly, it suggests ways to strengthen defamilization and familization measures in order to enable women to accumulate sufficient retirement income on the basis of three preconditions: policy attention to the reciprocal relationship between familization/defamilization measures and pension schemes for women; a recognition of differences between women in their preferred strategies to accumulate pension income; and an emphasis on a life course perspective to understand the double jeopardies faced by women in saving for retirement.     

Australia's retirement income revolution: a Finnish system "down-under"

Most advanced industrial societies are confronting serious economic recession, and governments are seeking ways to stimulate economic growth and reduce government expenditure. For many countries these problems are compounded by aging populations and demographic changes. There are fewer people in the workforce, and more people in older age groups live longer and have increased expectations for retirement lifestyles. The result has been that many governments are radically transforming their systems of retirement income provision, often causing political, economic and social upheaval and widespread public anxiety. Australia is one country in which there have been huge changes in the retirement income system in the past 5 years. The system has been substantially privatized, and future retirement income will come from statutorily enforced earnings-related individual savings accumulated in decentralized private funds. Australia's new retirement income regime bears extraordinary similarities to the Finnish system of employment-related pensions, yet there was no reference to the Finnish system in the evolution of the new Australian system. There are lessons for Australia and for other countries in the long and successful operation of the Finnish pension system. This article first examines Australia's retirement income system, recent government policy changes and likely implications of these retirement policy changes for the future of Australia's traditional welfare state. Cross-national comparisons of the retirement income regimes in Finland and Australia, identifying international best practice in each country, comprise the second half of the article. Such comparisons will be of interest to policy-makers seeking new policy directions.     

Facilitating access to services for children and families: lessons from Sure Start Local Programmes

With the introduction of the highly publicized Sure Start Local Programme (SSLP) initiative in 1998, the UK government introduced a community‐based set of provisions targeted at families with children under 4 years who were living in some of the 20% most deprived and disadvantaged geographical areas in England. These programmes were designed to combat the adverse effects of poverty and disadvantage on the long‐term outcomes for children and families. One challenging dimension for programme development has been the facilitation of access to the services on offer in these programmes. Drawing on findings from the implementation module within the government‐commissioned National Evaluation of Sure Start, this paper examines the way in which SSLPs have sought to facilitate access to services for their local communities and to encourage community members to take up and continue using those services. This paper presents a detailed overview of programme activity in respect of access. It identifies a continuum of access and a model of three styles of parental service use. The paper highlights the implications of the SSLP implementation process for the development of subsequent related initiatives such as children’s centres and extended schools.