An actuarial balance sheet of the Swiss old‐age pension scheme

Following the recent update of the international System of National Accounts (2008 SNA), internationally comparable estimates of accrued‐to‐date pension liabilities (ADL) of unfunded social security pension schemes will soon be available in the supplementary table to the National Accounts. Against this background, this article analyzes the medium‐term sustainability of the Swiss old‐age pension scheme (Alters‐ und Hinterlassenenversicherung – AHV). This is achieved by estimating a “Swedish” actuarial balance sheet, which compares pension liabilities with the explicit and implicit assets of the pension scheme. Our results show that the current financing of the AHV is unsustainable, with about 30 per cent of the liabilities not backed by corresponding assets. In order to close this financing gap either the contribution rate should rise from 8.4 per cent to 12 per cent or all pension liabilities should be cut by about 38 per cent.     

Designing a social security pension system

Abstract   This paper looks at potential models of social security pension systems. 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.     

Determining factors leading affiliates to transfer from an individual accounts pension scheme to a pay-as-you-go pension scheme: Evidence from Argentina

Prior to the recent implementation of the Argentine Integrated Social Security System (SIPA — Sistema Integrado Previsional Argentino ), the 2007 reform represented the first major change in Argentina's old-age social security system since 1994. For the first time, workers contributing to the private defined-contribution individual accounts scheme were able to choose freely to move over to the public pay-as-you-go (PAYG) scheme. This study is an attempt to analyse the special characteristics of those who opted for transfer to the public PAYG scheme and to discover whether the behaviour of these individuals is in line with that of a "simulated worker" attempting to optimize income. The analysis includes an estimate of the probability that individuals with certain characteristics will transfer.     

Public pension institutions and old‐age mortality in a comparative perspective

Norström T, Palme J. Public pension institutions and old‐age mortality in a comparative perspective Int J Soc Welfare 2010: ??: ??–??© 2010 The Author(s), Journal compilation © 2010 Blackwell Publishing Ltd and International Journal of Social Welfare. The aim of the study was to estimate the impact of changes in pension rights on old‐age mortality. We made a distinction between two dimensions of pension benefits, one of providing basic security (BASIC), and the other of providing income security (INCOME). Analyses were based on data for 18 OECD countries during the post‐war period. The outcome comprised old‐age excess mortality, defined as the ratio of the mortality rate 65+ to the mortality rate in the age group 30–59 years. The latter was regarded as a proxy for unobserved factors potentially related to old‐age mortality as well as pension rights. The pooled cross‐sectional time series data were analysed through fixed effects modelling. The results suggest that BASIC (but not INCOME) has a beneficial impact on old‐age excess mortality, which was statistically significant. We interpret the results in terms of the poverty‐reducing effects of pension entitlements with a basic security orientation.     

Social security for China's rural aged: a proposal based on a universal non‐contributory pension

Yang Y, Williamson JB, Shen C. Social security for China's rural aged: a proposal based on a universal non‐contributory pension Int J Soc Welfare 2010: 19: 236–245 © 2009 The Author(s), Journal compilation © 2009 Blackwell Publishing Ltd and the International Journal of Social Welfare. China's relative lack of social security coverage for rural elders exacerbates the already severe rural–urban economic disparity, slows the rate of rural poverty reduction, and raises social justice concerns. Our analysis draws on evidence from a number of sources including interviews with experts on China, Chinese government documents, Chinese newspaper accounts, and other sources from other countries. Based on our analysis of what has been tried in other countries and the current situation in rural China, we offer some suggestions for Chinese policy makers. We suggest that, for rural China, a universal non‐contributory old‐age pension deserves serious consideration, and refer to our proposed model as a Rural Old‐Age Social Pension. It will reduce the level of poverty in rural areas and the degree of income inequality between rural and urban areas while simultaneously promoting social and political stability.     

A “Swedish” actuarial balance for a notional defined contribution pension scheme with disability and minimum pension benefits

This article proposes a “Swedish” type actuarial balance sheet (ABS) for a notional defined contribution (NDC) scheme with disability and minimum pension benefits. The proposed ABS splits the pension system in two parts: the pure NDC part and the redistributive part, which includes the assets and liabilities originating from non‐contributory rights. The article contains a numerical example that sheds light on the real applicability of our proposal. The model has practical implications that could be of interest to policy‐makers, given that it integrates actuarial and social aspects of public pensions and discloses the real cost of redistribution through minimum pensions.     

From reform to crisis: Argentina's pension system

Argentina underwent economic and social collapse in December 2001. The crisis brought the worst socioeconomic indicators in its history, and the pension system was not immune from this disaster, which was unparalleled in any middle-income developing country. In 1994 the pension system had been restructured, and was regarded as a viable model for other reforms elsewhere. This article discusses in general terms the features of the current pension scheme, the structural problems that were not resolved in the reform of 1994, the relation between that reform and the government's financial crisis, and the impact of the economic collapse on the pension system. Finally, it discusses some aspects of the challenges faced in building a system that is financially viable and has the potential to close the major gaps in coverage affecting both the working population and older persons.     

Old‐age protection for women in the Spanish pension system

The example of Spain confirms the common view that contributory pension systems reproduce inequalities between the sexes that result from the nature of labour market structures and the sharing of family responsibilities. In general, women who stay at home are not entitled to their own pensions and are dependent on benefits of lower value such as survivors' pensions (derived entitlements) or non‐contributory pensions. In turn, women who work outside the home accrue lower entitlements than men and, consequently, lower old‐age or disability pensions (personal entitlements). The purpose of this article is to examine the figures for pension distribution by sex in Spain, review some of the pension policies that have been implemented since 2000, and propose direct action for progress in the transition from derived entitlements to personal entitlements. These proposals are designed to promote sex equality, defined as the right to equal well‐being and financial security in old age.     

The effects on intra‐generational inequality of introducing a funded pension scheme: A microsimulation analysis for Estonia

This article uses a single male cohort microsimulation model to analyse the intra‐generational and distributional effects of a shift in Estonia from a defined benefit pay‐as‐you‐go (PAYG) pension system to a multi‐pillared system with a PAYG scheme with contribution‐based insurance components and a funded pension scheme. We contribute to the literature on microsimulation by showing how introducing contribution‐based insurance components and compulsory defined contribution (DC) schemes can increase pension inequality. Our results show that in the case of a high level of inequality in labour earnings and high long‐term unemployment rates, such as in Estonia, the introduction of a very strong link between contributions and future benefits leads to considerably higher inequality in pension incomes as measured by the Gini coefficient. Simulation results for Estonia suggest that inequality in old‐age pension incomes more than doubles when the reforms mature. In contrast, the inequality in replacement rates decreases.     

From separability to unweighted sum: A case for utilitarianism

After reviewing the compelling case for separability (`social welfare is a separable function of individual utilities'), an argument is advanced for utilitarianism (defined as `social welfare is the unweighted sum of individual utilities'). Basically, a compelling individualism-type axiom leads us to (social welfare as an) unweighted sum (of individual utilities), given separability.     

The reform and development of old age pension policy in China

Despite the anticipation that the legal system would be able to offer a civilized and institutionalized means in settling the infringement of homeowners' property and consumer rights, empirical evidence has instead indicated a decline in the employment of litigation in dispute resolution. This paper attempts to examine the complex interaction between the rule of law and homeowner activism in upholding their rights. Information on property related litigation was collected from online court rulings in Shanghai which is supplemented with in-depth interviews with homeowner activists who were involved in litigation. In this paper, the rule of law in China is analysed within a wider socio-political context of neighbourhood governance and the emerging civil society. Despite the inadequacy in the legal system in protecting homeowners' rights, empirical evidence has shown that homeowner activists have explored the legal system, not just as a means of redress but also to employ creatively as part of their action strategy in settling their problems outside the court.     

The risk of under-insurance in the Finnish statutory pension scheme for self-employed workers: A trajectory analysis

Using unique data on the contribution base, we investigate under-insurance within the statutory pension scheme for self-employed workers in Finland. Under-insurance is defined as the difference between pension-declared income and tax-declared income. The trajectory modelling technique applied has allowed us to estimate the levels of under-insurance for different subgroups and to identify possible explanatory factors. Under-insurance is found to be persistent and large. The analysis reveals six distinctive and homogenous sub-groups of self-employed workers. Close to 84 per cent of these workers pay too little in contributions, often leading to inadequate protection against personal risks. Especially for lower-income self-employed workers, this points to myopic behaviour as regards contributing to the self-employed statutory pension scheme and calls for fine-tuned economic incentives.     

Cash‐for‐care payments in Europe: Changes in resource allocation

Resource allocation has been a main policy issue in cash‐for‐care schemes (CfCs) for older people in Europe since their inception. It regards how publicly funded care benefits and services are distributed among older people. The raising pressures of an ageing population and the tensions on the financial sustainability of welfare regimes in place have further exacerbated the relevance of this topic over the recent years. Nevertheless, comparative research so far has overlooked changes in resource allocation in CfCs over time. This article contributes to fill this gap, exploring changes in resource allocation of CfCs for older people in a sample of European countries—Austria, England, France, Germany, Italy, and The Netherlands—since the early '90s (or since the introduction of the scheme). It examines three analytical dimensions: (a) The mix of public services and benefits provided to older people (CfCs, community services in kind, residential care); (b) the level of CfCs coverage; and (c) its generosity. A combined view of these dimensions leads to the discussion of two dilemmas: How to allocate the resources devoted to CfCs in the light of the trade‐off between its coverage and intensity? And, within the whole long‐term care system, how to allocate resources between CfCs and services in kind?     

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.     

Implicit debt in public‐sector pension plans: An international comparison

Most countries have separate pension plans for public‐sector employees. The future fiscal burden of these plans can be substantial as the government usually is the largest employer, pension promises in the public sector tend to be relatively generous, and future payments have to be paid out directly from government revenues (pay‐as‐you‐go) or by funded plans (pension funds) which tend to be underfunded. The valuation and disclosure of these promises in some countries lacks transparency, which may hide potentially huge fiscal liabilities to be passed on to future generations of workers. In order to arrive at a fair comparison between countries regarding the fiscal burden of their public‐sector pension plans, this article recommends that unfunded pension liabilities should be measured and reported according to a standard approach for reasons of fiscal transparency and better policy‐making. From a sample of Member countries of the Organisation for Economic Co‐operation and Development, the size of the net unfunded liabilities as of the end of 2008 is estimated in fair value terms. This fiscal burden can also be interpreted as the implicit pension debt in fair value terms.     

Exploring a blind spot in comparative pension reform research: Long‐term trends in non‐contributory pensions in Europe

Over the past two decades, pension reforms have been high on the agenda of social policy makers in Europe. In many countries, these reforms have resulted in less generous public pensions. At the same time, minimum income protection for older adults has received attention from policy makers, but much less so from social policy researchers. Therefore, this study explored how benefit levels of non‐contributory minimum income schemes for older adults evolved from 1992 to 2012 in 13 ‘old’ EU member states. Building on two cross‐national longitudinal datasets with comparative data on minimum income protection in Europe, the study shows that over the past 20 years, the erosion of the principal safety net of last resort for older persons has been limited. Moreover, a substantial number of European countries have pursued a deliberate policy of considerably increasing minimum income benefits.     

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.     

Private and public pension schemes: Elements of a comparative approach

The comparative approach offers improved understanding of what is at stake for enterprises, workers and States in developing private pension schemes to fill the gap left by public schemes. The features that distinguish private schemes result from the freedom with which they were designed — by enterprises themselves or through collective bargaining — and the limits imposed by growing state intervention in granting fiscal concessions or stipulating social guarantees. Depending on how these various components are combined, private schemes may offers workers added protection or form a source of insecurity.     

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.     

Assessing parenting capacity in child protection: towards a knowledge‐based model

The assessment of parenting capacity continues to engender public concern in cases of suspected harm to children. This paper outlines a model for approaching this task based on the application of three key domains of knowledge in social work relating to facts, theory and practice wisdom. The McMaster Model of Family Assessment is identified out of this process and reworked to give it a sharper focus on parenting roles and responsibilities. Seven formative dimensions of parenting are then elicited and combined with an analytical process of identifying strengths, concerns, prospects for growth and impact on child outcomes. The resulting assessment framework, it is argued, adds rigour to professional judgements about parenting capacity and enhances formulations on risk in child protection.