FINLAND

The durability of all institutions during this last decade of the twentieth century has been tested by the economic recession. Repercussions have hit the Finnish pension system from two directions - problems in financing, and the need to cut costs in the public sector. However, in the long run, the question of securing pensions is a matter of will. In recent years, some major amendments to laws have been made successfully, including a higher age limit for early retirement, lower levels of disability and early retirement pensions and diminished index adjustments of old-age pensions. These amendments give even more reason to believe that the main contributors to the pension system have the capacity and the will to secure the Finnish employment pension system.     

A comparative analysis of pension reforms and challenges in Ghana and Nigeria

Ghana and Nigeria recently joined a number of countries that have incorporated fully‐funded defined contribution pension programmes into their national social security arrangements. Contemporary analyses of pension reforms, however, continue to focus on middle‐income countries in Latin America and Central and Eastern Europe, as well as on Member States of the Organisation for Economic Co‐operation and Development, thereby marginalizing recent pension policy reforms in sub‐Saharan African countries. This article examines the complete and partial shifts to defined contribution pension programmes in Nigeria and Ghana respectively, and points to a number of contextual and contingency factors that challenge the use of defined contribution schemes as a means to address problems of benefit adequacy in the sub‐Saharan African context.     

Economic crisis and social policy reform in Korea

The economic crisis that broke out in Korea in December 1997 has had a chilling impact on social development in the country. Today unemployment is the highest that Korea has experienced in the past thirty years. This paper aims to examine the impact of the economic crisis on social development and the role of public policy to mitigate the problems caused by the crisis. The economic crisis has hit vulnerable groups harder, increased the proportion of part-time and daily workers, and reversed the trend of steady improvement of income distribution. The economic crisis along with the trend of aging population, globalization, and competition calls for an expanded role of social policy, which the Korean government has neglected for a long time. The main targets of social policy reform in Korea include the expansion of government programs and safety nets for the unemployed and redesigning the national pension and health insurance scheme to provide adequate income security as well as to improve the system sustainability.     

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.     

Reforming pensions: Principles, analytical errors and policy directions

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.     

Notional defined contributions (NDC): Solvency and risk in Spain

The aim of this article is twofold: to demonstrate the actuarial imbalance in the Spanish pension system in its current form; and to measure the degree of aggregate economic risk to which pensioners are exposed when applying formulas for the calculation of retirement pensions based on notional accounts. The model used generates scenarios for various periods encompassing some 10,000 different permutations of the macroeconomic indices needed to calculate such parameters as initial pension, earnings replacement rate, or internal rate of return and value at risk. The findings are analysed both objectively and subjectively. The main conclusions are that if the projections for the macroeconomic indices used bear only a minimal resemblance to reality, the pension system will accumulate further financial imbalance in the future that will force it either to reduce initial pensions considerably or to make some radical adjustments to the parameters. In terms of risk, for beneficiaries with high risk aversion the preferred formulas would be those based on future variations in wages with a constant pension amount in real terms; on the other hand, those less averse to risk would prefer formulas that generate a smaller initial pension but one which grows in real terms with subsequent changes in wage levels.     

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。     

Working life and retirement pensions in Spain: The simulated impact of a parametric reform

This article aims to offer an ex ante evaluation of the impact of a parametric reform of the Spanish pension system that would involve increasing the reference period used to calculate benefits, an approach proposed many times by various actors in the socio‐economic field. Such gradual change may be categorized as a non‐structural reform of the pension system. This contrasts with reforms of a structural nature that have been very popular in Latin America and elsewhere, involving the creation of defined contribution individual account schemes. As regards the parametric reform proposed in this article, the main findings indicate that it would have a small but negative impact on pension income for pensioners and would reduce income distribution.     

From pension funds to piggy banks: (Perverse) consequences of the Stability and Growth Pact since the crisis

As part of their strategy for economic and monetary union, European governments committed themselves to fiscal discipline – particularly by placing limits on annual deficits and on public debt. Subsequently, and as they sought to respond to the “current crisis”, they embraced the view that only if public finances were kept under control would sustainable recovery be possible. Rules of fiscal governance were strengthened. To help them meet these rules, the governments of many member States of the European Union made changes to their pension systems or to funds they had established specifically to pay the costs of population ageing. The intention was not to cut retirement benefits or to improve the efficiency of the relevant pension schemes and institutions. Rather, it was to free up resources immediately. Funded pension schemes and pension funds were treated like “piggy banks” that were raided when times became hard. Moreover, the policies pursued succeeded in meeting their objectives only because the system of national accounts according to which outcomes are judged does not recognize the way in which most of the fiscal gains are matched by future fiscal liabilities.     

The Impact of Neo-liberalism on South Korea's Public Pension: A Political Economy of Pension Reform

This article examines the recent Korean pension reforms from a political economy perspective. It argues that these reforms are of particular interest because, unlike major pay-as-you-go pension schemes in Europe, the Korean pension scheme is a funded one and, therefore, is subject to market exposure. Also in contrast to the problems that public pension reforms have encountered in European and other OECD countries, especially 'blame avoidance', the more radical Korean reforms were implemented without significant challenge or resistance. First of all, the National Pension Scheme is described prior to the 1997 Asian economic crisis. Then the impact of this crisis on the Korean welfare state and, especially, its pension system are analysed. The main part of the article consists of a political economy of the pension reform process, in which the key roles of the international governmental organizations and the domestic neo-liberal policy elite are pinpointed. This neo-liberal ideology was critical in developing and sustaining an influential discourse on the 'crisis' in Korea's national pension fund. The article concludes by arguing, against the neo-liberal tide, for the inclusion of a pay-as-you-go element in the national pension in order to tackle escalating poverty in old age.     

Political risk and pension privatization: The case of Argentina (1994-2008)

Proponents of pension privatization in Latin America argued that systems of private fully pre-funded defined-contribution individual accounts would be better insulated from politics than was the case with public pay-as-you-go pension systems. However as the Argentinean case demonstrates, most recently with the 2008 nationalization of its private individual accounts system, transferring pension management and investment to the private sector does not necessarily reduce or eliminate political risk. In fact, the implementation of systems of individual accounts creates a new set of political risks, in part because they are a potential financial resource for governments, especially during times of economic stress. This article describes the range of political risks inherent to individual account pension systems, with specific reference to Argentina's 1994-2008 experience with privatization.     

Pension privatization in crisis: Death or rebirth of a global policy trend?

From 1981 to 2007, more than thirty countries worldwide fully or partially replaced their pre‐existing pay‐as‐you‐go pension systems with ones based on individual, private savings accounts in a process often labelled “pension privatization”. After the global financial crisis, this trend was put on hold for economic, ideational, and institutional reasons, despite a rise in critical indebtedness that has facilitated pension privatization in the past. Is the global trend towards pension privatization dead or in the process of being reborn, perhaps in a somewhat different form? Several recent trends point to rebirth as policy‐makers scale back public and private pension systems, attend to minimum pensions and “nudge” rather than mandate people to save for retirement.     

Extending pension coverage in Cambodia: The governance and investment challenges of the Social Security Investment Fund

Rapid economic growth, declining fertility and changes in family structures have encouraged the Kingdom of Cambodia to reform its old-age pension system. The Government of Cambodia reached an important milestone in 2019, when the Law on Social Security was promulgated. The Law includes provisions for a compulsory defined benefit pension scheme, establishing a sound framework for extending compulsory pension coverage beyond the public sector to formal private-sector workers. As a future step, the compulsory pension scheme should be extended to informal workers. To accompany the reform, the investment policy for the pension scheme’s reserve funds, including the supervisory regime and investment strategy, will be essential for the modernization of the Cambodian social security system. In this regard, Cambodia has successfully sought policy advice. However, the country should continue to seek further advice, and to act on this. Otherwise, the necessary and increasingly pressing policy ambitions of Cambodia to develop an adequate and sustainable social protection system may not be fully realized.     

An International Comparative Study on Women's Pension Rights and Their Economic Risks

This article examined the theoretical meanings of pension rights and analyzed their effects on women's economic risks in developed countries. First, based on the status of a citizen, worker, parent, and spouse, this study investigated how pension benefits are guaranteed as a citizen regardless of work history, the degree to which women's disadvantageous situations in the labor market and unpaid work are compensated by public pension as workers and parents, and how marital status is treated in the different pension systems. Second, analysis of the effect of pension rights showed that individual rights is a significant factor to prevent economic risks of elderly women. Derived rights did not seem to secure the economic welfare of elderly women, at least in a comparative context. This finding suggested that developing individual rights, rather than derived rights, is the way to guarantee long‐term elderly women's economic welfare.     

Contribution evasion: Implications for social security pension schemes

However well-conceived a contributory national pension programme may be, however sound the economic principles on which it is founded, irrespective of whether it is based on defined benefits or defined contributions or whether it is publicly or privately managed, if participants fail to meet their contribution obligations the pension scheme cannot achieve the objective of providing adequate retirement income for them and their dependants. Contribution evasion has obvious implications for individuals. But it also has implications for the State, which may be importuned to supplement inadequate pensions from general revenues. The nature of contribution evasion and the reasons why contributions are evaded are surveyed. Possible practical measures which have been applied to promote compliance are described and the dangers of contribution evasion to participants and to the State are outlined.     

Assessing the impact of liberalising the one-child policy on the sustainability of China’s pension system

This article examines the effects of the so-called two-child policy on the future demographic structure and on alleviating the pension payment pressures. To this end, we provide population projections based on the cohort-component method and simulate the total fertility rate in different social-demographic scenarios. Actuarial models for pension fund budgets are calibrated. We found that the economic effects of the new fertility policy involve a time lag, with the predicted system dependency ratio significantly declining after 2035. The overall sustainability of pension balance will be improved, however, with the occurrence of both current and accumulated deficits delayed.     

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.     

Pension reform, the stock market, capital formation and economic growth: A critical commentary on the World Bank's proposals

Proposing far-reaching reforms to pension systems, the World Bank has recently suggested that the existing pay-as-you-go systems in many rich as well as poor countries should be replaced by fully funded, mandatory, preferably private pensions, as the main pillars of the new system. It argues that these reforms will not only benefit pensioners but also enhance savings, and promote capital formation and economic development. This paper provides a critical examination of the Bank's theses and concludes that it has adopted a one-sided view of the relationships between the key critical variables. The proposed reform may therefore neither protect the old nor achieve faster economic growth.     

‘I Might not Live That Long!’ A Study of Young Women's Pension Planning in the UK

There has been considerable concern about levels of pension saving especially given increases in longevity and rising pension deficits. In particular, the prospects of many future female pensioners have been questioned. As pensions are determined by contributions throughout the life course it is imperative to comprehend the attitudes, knowledge, expectations and savings habits of people from an early age to explore why under‐saving occurs. This is particularly pertinent given recent governments' emphasis on individual responsibility for financial provision in retirement. However, there is little research which focuses specifically on young women's attitudes or planning towards pensions despite considerable concern about the future of women's pensions. This article considers young women's (18–30) attitudes towards pensions and whether they differ according to socio‐economic status by using interviews with 15 women (five in routine and manual occupations, five intermediate, five professional and managerial) about how knowledge and choice, trust, responsibility, risk and uncertainty impact on their pension decisions. It is evident that the ability and willingness of people to contribute to a pension depends, among other things, on the pension offered by employers, the pension requirements in place and immediate financial needs. Therefore this article shows that pension policy needs to take into account women's employment histories, which are often fragmented and diverse, when considering young women's attitudes towards pension saving.