A comparative study of the relationship between pension plans and individual savings in Asian countries from an institutional point of view

Hur MH. A comparative study of the relationship between pension plans and individual savings in Asian countries from an institutional point of view Int J Soc Welfare 2010: 19: 379–389 © 2009 The Author, Journal compilation © 2009 Blackwell Publishing Ltd and the International Journal of Social Welfare. This study identifies various saving plans used as alternative pension plans in Asian countries and examines the extent to which these saving plans contribute to their pension schemes. Data were collected from six Asian countries: China, Hong Kong, Japan, Korea, Singapore and Taiwan. The comparison concentrates on an examination of differences and similarities in individual countries' privately managed pension schemes and saving plans. This study suggests that a pension system does not have to be a privately managed plan to encourage individual savings. A critical point for individual savings was avoiding a defined benefit plan. On the basis of these findings, a typology of relationships between second and third pillars and provident funds and incentive systems for individual savings was developed.     

Social Security at The Crossroads: Toward Effective Pension Reform in Latin America

Individual pension savings accounts in Latin America promised to improve compliance and raise benefits in a cost‐effective manner, while at the same time raising savings rates, which would in turn promote economic growth. A review of the evolution of pension reform in Latin America shows results to have been mixed. Analyses of the recent reforms generally fail to consider the extent to which the success or failure of pension systems is driven by exogenous factors, including macroeconomic and labour market conditions, and institutions. A number of recent studies have issued a reassessment of the region's reforms that stresses the importance of a basic guaranteed pension benefit and recognizes that a range of alternatives are viable in the region. Pension systems based on individual accounts are undergoing a thorough reevaluation.     

Assessing Pension System Reforms in Latin America

During the 1980s and 1990s sweeping structural changes were made to social security systems in a number of Latin American countries. This paper aims to assess the impact of those reforms, showing their possible limitations, risks and internal malfunctions. The impact on the following will be considered: (a) coverage; (b) risks and uncertainty; (c) redistributive aspects; (d) savings; and (e) the administration and management costs of the new system.     

An Exploratory Study of Soldiers' Attitudes Toward a Matched Savings Program in Korea

ABSTRACT

This study explores the possibility of implementing a saving program for military soldiers in Korea. Over the past decade, asset-based programs have been expanded in Korea. Using a vignette method describing a military matched savings program and logistic regression, this study examines soldiers' attitudes toward a matched savings program. This study with a final sample of 224 soldiers in a Brigade in Korea found that 67% of survey participants are willing to join a savings program. In addition, most soldiers expect the program to have a positive impact on their military life, saving habits, and life after army service. A logistic regression analysis found that family relationship, duty type, rank, and age are significantly related to a soldier's willingness to join the program. The study provides policy and practice implications in that a military savings program may help soldiers to adapt to army service and prepare for life after army service. This study concludes with possibilities for future research when examining soldiers' attitudes toward a military savings program.     

拉丁美洲国家应对气候变化法律与政策分析

为有效应对气候变化,拉丁美洲国家在参与气候变化国际谈判的同时,还制定了相应的应对气候变化的法律、政策和行动计划,形成了两种推进方式：以气候变化法律为主、政策为辅的法律主导方式,以气候变化政策为主、少有甚至没有相关立法的政策主导方式。整体上看,拉丁美洲国家在应对气候变化上取得了较大进展,尤其是在气候变化综合性立法上取得了突破,在发展中国家中处于领先地位;气候变化国家政策正顺应时代潮流加速发展。在气候变化立法上,拉丁关洲国家在发展中国家中处于领先地位,在气候变化政策上,拉丁美洲国家正加快发展速度。由于受到多方面因素的制约,拉丁美洲国家在制定与实施应对气候变化法律与政策时仍面临一定阻力,个别国家在应对气候变化上徘徊不前,须尽快弥补政策空白。     

Latin America's recovery from debt problems: An assessment of model-based projections

This paper examines economic assumptions used in assessing prospective economic adjustment of Latin America in response to its debt problems. The analysis compares forecasts obtained by combining parameter estimates from different researchers' trade models with the authors' macroeconomic models for Brazil. Chile, and Mexico. The influence of econometric procedure on simulation results is discussed. Then, by simulation analysis, the following issues are addressed: (1) likelihood of high domestic growth rates for Latin America in the late 1980s; (2) whether OECD growth or interest rates have a larger impact on developing-country economies; (3) effects of dollar depreciation and high interest rates on Latin America's debt problems.     

The Effects of Participation and Resources on Democratic Attitudes: Role of Social Capital in Four Latin and South American Countries

ABSTRACT

Social capital research in Latin and South American countries has been gravely limited by the absence of valid measures of social capital. This study seeks to create a scale for measuring social capital in the Latin and South American context using exploratory and confirmatory statistical procedures. It also seeks to test the effect of social capital on democratic attitudes in Latin America through structural equation modeling methods. Analysis of four countries in Latin and South America suggests that social capital is positively related to democratic attitudes. Recommendations for future studies are highlighted, and scale properties and outcomes are discussed.     

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.     

Do young generations save for retirement? Ensuring financial security of Gen Z and Gen Y

Concerns about the population aging and global trends to shift more responsibility for future retirement from the state to the individual need policy planning to increase youth's savings for retirement. The study aims to identify behavioral, financial, demographic, and educational determinants of savings for retirement in two groups of young adults with reference to people aged 50–60. The binary logit model and pairwise comparison results showed that the probability of saving for retirement increases with age and responsibility fosters saving behavior among young adults. The observed differences allow the formulation of policy recommendations adapted to the preferences of generations Z and Y.     

Social policy expansion and segmentation in the first two decades of the 21st century in Latin America

Latin American countries saw an important expansion in social policy in the first two decades of the 21st century. Along with this increased inclusion, however, social policy remains segmented. Using recent data from ECLAC, World Bank, and other sources, this paper offers a comprehensive analysis of trends in social policy for the period 2000–2020 for 17 countries in Latin America. Four areas of social policy are assessed in longitudinal and comparative perspectives: transfers, health care, education, and family policies. Conditional cash transfers (CCT) and noncontributory pensions (NCP) are the two main policy innovations that allowed countries in the region to expand social rights to previously excluded populations (outsiders). At the same time, due to their design, these policies have introduced new layers of fragmentation to the welfare mix, without resolving—or even increasing—segmentation in social policy. Segmentation is still the rule for the areas of health care and education, and increasing privatisation went unabated even in the periods of social policy expansion and in the countries governed by left coalitions.     

Does population ageing affect savings in Europe?

Ageing is going to be greater and greater in the forthcoming decades. At the same time, old-aged dependency and longevity occur due to rising life expectancy at birth. Our study aims to examine the effect of population ageing on private savings. A panel data of a sample of selected European countries collected from the World Bank (WB, 2016) – World Development Indicators (WDI) database is used, in order to analyze possible heterogeneity across and multiple subsamples. The span period is 1990–2013. Besides, economic growth and crisis provide empirical support. Our findings show that longevity and dependency rates have both significant impacts on savings. However, the results are influenced by the way in which the data is managed. Therefore, this calls into question the practice of applying for a reform in the government’s old-age support programs. Besides, the paper makes a good contribution to knowledge: firstly, it is innovative since it puts together demographic and economic variables among a selected group of developed countries; secondly, it uses a very up-to-dated database; and thirdly, it fills a gap in the literature.     

Crowding Out or Welfare Promotion? How Foreign Aid Affects Social Expenditures in Latin American Welfare Systems

Foreign assistance constitutes a significant share of government revenue in many low‐ and middle‐income economies and is targeted at poverty reduction and the promotion of social and economic well‐being. This study therefore examines fiscal responses by Latin American welfare states to the inflow of such aid. As a form of external non‐tax revenue, aid can function as a substitution for public welfare expenditure, with a crowding out effect being the likely outcome. This article investigates whether overall aid and aid that is particularly targeted at the social sector substitutes public welfare provision and, if so, whether it also substitutes its function. A time‐series cross‐section analysis of 19 Latin American countries for the period 1980–2008 provides limited support for the assumption that foreign aid payments influence the welfare budget. It is only the health care sector in middle‐income countries which experiences a small decrease in expenditures. Social security and education expenditures are not affected.     

Structural reform of social security pensions in Latin America: Models, characteristics, results and conclusions

The structural reform of social security pensions is the subject of international debate, and Latin America has been a pioneer of such reform. The region has gathered experience over two decades, and had an important influence on other regions. This article gathers legal and statistical data about reform in ten countries of Latin America, in order (1) to analyse the three distinct general models followed and note the characteristics of the reforms in the different countries; (2) to evaluate the performance of the reforms against nine conventional assumptions about its effects; (3) to draw useful lessons from these reforms for the region and other countries.     

A framework for comparing social protection in developing and developed countries: The example of child benefits

Abstract   The article outlines a conceptual and theoretical framework for improved comparative analysis of publicly provided social protection in developing countries, drawing on the research tradition of the study of longstanding welfare democracies. An important element of the proposed institutional approach is the establishment of comparable qualitative and quantitative indicators for social protection. The empirical example of child benefits indicates that differences between developed and developing countries should not be exaggerated, and that the prevalence of child benefits in sub-Saharan African and Latin American countries today resembles the inter-war period (1919-1938) situation in developed regions.     

Can Latin America carry its international debt? A prospective analysis using the Wharton Latin American debt simulation model

The international debt of the LDCs has become a critical concern, perhaps currently the most critical one, from the perspective of debtor countries and creditors alike. Through the efforts of the IMF, the BIS, the central banks, and the large commercial banks, a crash may have averted for the time being, but the heavy burden of the debt remains, particularly in Latin America, where it is increasingly concentrated. Draconian remedial measures now threaten social and economic development throughout the continent.This article evaluates the perspective for Latin American debts and payments using a debt simulation model. Debt restructuring with the usual “IMF conditions” will impose serious economic shocks in Latin America. But even so, debt service ratios will remain high except under optimistic assumptions about growth in the industrial countries and about commodity prices. Only in case of a solid economic recovery in the United States, Europe and Japan can one be sanguine about Latin America's ability to work its way out from under the debt burden.     

Global imbalances and household savings: The role of wealth

Many claim that fluctuations in U.S. private savings help to create and to sustain global imbalances because of their influence on the current account deficit. To test this claim, this paper investigates the determinants of aggregate household savings using a panel of 18 developed countries for the period 1980–2005. We weave two strands of literature: the first strand from consumer theory, considering specifically the ‘wealth effect’, the second strand from aggregate private savings theory. The original contribution of this paper derives from the main explanatory variables of the household savings function: two measures of household wealth, the first a financial variable and the second a variable for tangible/housing stock. The salience of these variables has not been tested before. The model is then enriched with variables taken from the private savings literature. To find the best technique to estimate the long run savings function, unit root and cointegration tests are carried out, from which evidence of a cointegrating relationship is found. The group means FMOLS is used to estimate the model. The empirical evidence suggests effects consistent with theory: an increase in wealth negatively affects household savings. Furthermore, when important explanatory variables, such as government savings and population dependency ratios, are included in the model, tangible wealth becomes the only kind of wealth to (weakly and negatively) influence household savings in developed countries. In the U.S. however, wealth does not seem to affect household savings negatively, it seems instead that government savings and population changes better explain the decline of savings during the past two decades. This finding provides additional evidence on the issue of global imbalances, and suggests that the recent booms of the stock and the real estate markets should not be blamed for the decline in U.S. household and private savings.     

The Role of Distributional Coalitions in Welfare Regimes: Chile, Costa Rica and El Salvador

Do social policies in Latin America promote or discourage distribution? And if they do promote distribution, are coalitions a prerequisite? Drawing from a typology of welfare regimes elaborated for 18 Latin American countries, this article explores responses to these questions by addressing three emblematic cases: Chile, Costa Rica and El Salvador – that is, countries where the management of social risks primarily revolves around markets, states and families, respectively. Although the article is exploratory, findings suggest that societal coalitions have been, and are likely to continue to be, weak in market welfare regimes, strong in state welfare regimes and contingent to policy sectors in familialistic welfare regimes.     

Latin America and the crisis (points for the balance of a decade)

The decade of the 1980s was catastrophic for the countries of Latin America because of profound transformations in the world economy, which started in the 1970s, the wilting of the state development programs that were imposed after World War II, and the collapse of socialism with the incipient transition to market economies. The crisis started because of the erosion of the world economic system as constituted under the Bretton Woods agreement; the drastic drop in the economic growth of market economies; the increased costs of living and the deterioration of the environment; the decrease in industrial capacity; and the emergence of transnationalization of production. In Latin America, the economic models that had been in place without solving underdevelopment became even more obsolete (import substitution, internal trade, and the role of the state). The crisis of socialism and the rapprochement of eastern European countries to western Europe also affected Latin America (e.g., Germany cancelled 30 mine exploration projects in Bolivia due to investments in East Germany). The structural readjustment policies of the International Monetary Fund and the World Bank resulted in currency devaluations, redistribution of government funds, elimination of various subsidies, reduction of public debt and social expenditures, reduction of public employment, and payment of external debt. The result was more inflation (in Bolivia, Brazil, Peru, and Argentina, inflation rates were 683.7%, 157.1%, 100.1%, and 326.2%, respectively, between 1980 and 1986), unemployment, and poverty in the lost decade of the 1980s. After 1982, state expenditures on roads, education, hospitals, and nutrition declined by 40% in Mexico. Even though most countries returned to democracy in the region, this was at the cost of the increased role of the military and the transnationals. The grand parties collapsed and in Venezuela, Mexico, and Colombia authoritarian tendencies survived into the 1970s degrading democracy. The states' socioeconomic regulatory role has to be redefined.     

Introduction: social policy and economic development in late industrializers

This Supplement in the International Journal of Social Welfare presents the main findings of a United Nations Research Institute for Social Development research project on social policy in late industrializers, covering countries in East Asia, Latin America, Middle East and North Africa (MENA), and sub-Saharan Africa, as well as the Nordic countries. One of the findings from the research is that social policy has been used as an integral part of economic development in successful late-industrializing countries. In the MENA region and sub-Saharan Africa, however, social policy was tried for too short a period to be properly implemented and tested. East Asian and Latin American countries started with a narrow-based social policy, but social policy in East Asia was extended to foster social solidarity, bringing people into the mainstream of social change. Such findings suggest that social policy is multifunctional, not only in terms of social protection but also economic development and democratic governance.     

Extending access to contributory pensions: The case of Uruguay

Since the 1980s, many Latin American countries have tightened access to contributory pensions, with financial sustainability being a main concern. Studies suggest that a sizable share of contributors would not be able to comply with stricter access conditions, since observed contribution densities were low. While most Latin American countries lack complete work history records, the observed density of contributions offered strong evidence of short contribution histories, in particular for low‐income workers and women. In the last decade these facts drove a new wave of reforms, in the form of less demanding eligibility requirements to access pensions and the need for a gender perspective. Uruguay took part in both processes, increasing vesting period conditions in 1996, then lowering them and granting childcare credits in 2008. In this article, we analyse the effects that less strict eligibility requirements would have on pension entitlements in Uruguay, estimating complete contribution histories using administrative records. Work history records have been kept since April 1996 only, meaning there are still no complete work histories. The study finds that pension rights would increase, in particular for women. The main effect would be driven by the lower contribution requirement. In addition, childcare credits would further reduce the gender gap in terms of access to benefits. The case of Uruguay is relevant in the regional context, as most Latin American countries are ageing rapidly and can learn from the Uruguayan experience, a country with vital statistics closer to those of developed countries. Also, recent reforms in the region show shared concerns on pension rights and the gender gap.