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Investment Regulations and Defined Contribution Pensions

Autor: Antolín, Pablo; Blome, Sandra; Karim, David; Payet, Stéphanie; Scheuenstuhl, Gerhard; Yermo, Juan
Año: 2009
Resumen: This paper assesses the impact of different quantitative approaches to regulate investment risk on the retirement income stemming from defined contribution (DC) pension plans. It looks at how such regulations affect the spectrum of investment policies available and, through this channel, how they affect the retirement income that an individual may expect from a DC pension plan. The analysis shows that there is a trade-off between potential retirement income and protection from bad outcomes. Reducing the downside risk on retirement income from DC pension plans requires moving into relatively conservative investment policies where the share of assets allocated to bonds may be quite large. However, this comes at the cost of renouncing potentially higher replacement rates that are attainable but at a higher risk of unfavourable retirement income outcomes. Less risk adverse regulators and supervisors would aim at lower probability requirements as regard the downside risk, which will increase the range of investment policies available and thus the share of riskier assets.

Fuente: Organización para la Cooperación y el Desarrollo Económico (OCDE)
Clasificación: Seguridad Social y Sistemas de Pensiones
Tipo de Publicación: Documentos de Trabajo
Idioma:

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Ex-Ante Methods to Assess the Impact of Social Insurance Policies on Labor Supply with an Application to Brazil

Autor: Zylberstajn, Helio; Robalino, David A.
Año: 2009
Resumen: This paper solves and estimates a stochastic model of optimal inter-temporal behavior to assess how changes in the design of the unemployment benefits and pension systems in Brazil could affect savings rates, the share of time that individuals spend outside of the formal sector, and retirement decisions. Dynamics depend on five main parameters: preferences regarding consumption and leisure, preferences regarding formal Vs. informal work, attitudes towards risks, the rate of time preference, and the distribution of an exogenous shock that affects movements in and out of the social security system (given individual decisions). The yearly household survey is used to create a pseudo panel by age-cohorts and estimate the joint distribution of model parameters based on a generalized version of the Gibbs sampler. The model does a good job in replicating the distribution of the members of a given cohort across states (in or out of the social security / active or retired). Because the parameters are related to individual preferences or exogenous shocks, the joint distribution is unlikely to change when the social insurance system changes. Thus, the model is used to explore how alternative policy interventions could affect behaviors and through this channel benefit levels and fiscal costs. The results from various simulations provide three main insights: (i) the Brazilian SI system today might generate distortions (lower savings rates and less formal employment) that increase the costs of the system and might generate regressive redistribution; (ii) there are important interactions between the unemployment benefits and pension systems, which calls for joint policy analysis when considering reforms; and (iii) current distortions could be reduced by creating an actuarial link between contributions and benefits and then combining matching contributions and anti-poverty targeted transfers to cover individuals with limited or no savings capacity.

Fuente: Banco Mundial
Clasificación: Mercado Laboral
Tipo de Publicación: Documentos de Trabajo
Idioma:

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Federative Republic of Brazil - Social Insurance and Labor Supply : Assessing Incentives and Redistribution

Autor: Banco Mundial
Año: 2009
Resumen: This technical report analyzes the potential effects of the pensions and income protection systems on labor supply decisions and through this channel the coverage and cost of the programs. The report addresses five policy questions: (i) how is the pension system influencing decisions regarding entry into the labor market, sector choice (formal/informal), and retirement? (ii) How are current income protection programs affecting turnover; job search efforts and sector choice?; (iii) Are there interactions between the two systems that aggravate or mitigate incentive effects?; (iv) What is the role of redistributive policies in determining observed outcomes?; and (v) Are there policy interventions that could be considered to correct incentives, while securing adequate income protection for different population groups (including workers in the informal sector)? The report is organized in three sections. This first section discusses the motivations for the study and sets the context by briefly describing some key stylized facts about the Brazilian labor market. The focus is on the composition of the labor force, its distribution by occupational categories, unemployment risks, and transitions between employment states including workers flows between the formal and informal sectors. The second section analyzes the Brazilian social insurance system in terms of incentives and redistribution. It starts with an overview of institutional arrangements, programs, and financing mechanisms, which flags the problem of a high tax-wedge. The report then analyzes the rules of the pensions and income protection systems and their potential effects on behaviors. The final section proposes a policy framework to guide reforms that could 'correct' incentives by making redistribution more transparent and progressive. A behavioral life-cycle model estimated for Brazil is used to illustrate how the application of this framework could affect contribution densities (and therefore the time spent working in formal sector jobs), retirement ages, savings, and programs cost. A companion policy note on social insurance and labor supply summarizes the main conclusions and recommendations from the analysis.

Fuente: Banco Mundial
Clasificación: Mercado Laboral
Tipo de Publicación: Informes
Idioma:

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Pension Reform in Southeastern Europe: Linking to Labor and Financial Market Reforms

Autor: MacKellar, Landis; Holzmann, Robert; Repansek, Jana
Año: 2009
Resumen: The reform of public pension systems and, more generally, the review of old-age income support are on the reform agenda worldwide. The reform discussion is more intense in countries where population aging is well advanced, including the member countries of the Organization for Economic Co-operation and Development (OECD), much of Latin America, China, Russia, and the former transition economies of Southeastern Europe (SEE). But developing countries in the global South are also awakening to the challenges of aging and old-age income support in view of changing family structures, urbanization, and migration. Over 80 percent of the increase in the numbers of persons age 65 and older up to 2050 will take place in countries with current per capita incomes of US$1,000 and below. Whereas the North grew rich before becoming old, the South risks becoming old before becoming rich. The remainder of the chapter attempts to substantiate this point. The next section briefly describes aging and its fiscal implications in the light of demographic developments in the countries of Southeastern Europe. There follows an outline of the drivers of pension reform that go beyond population aging and have to be understood when choosing among reform options. Subsequent sections take up recent international reform trends and lessons and underline key points concerning the labor market and financial market reforms needed to support pension reform. The chapter ends with some concluding remarks.

Fuente: Banco Mundial
Clasificación: Reformas de Pensiones
Tipo de Publicación: Libros
Idioma:

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Ex-Ante Methods to Assess the Impact of Social Insurance Policies on Labor Supply with an Application to Brazil

Autor: Zylberstajn, Helio; Robalino, David A.
Año: 2009
Resumen: This paper solves and estimates a stochastic model of optimal inter-temporal behavior to assess how changes in the design of the unemployment benefits and pension systems in Brazil could affect savings rates, the share of time that individuals spend outside of the formal sector, and retirement decisions. Dynamics depend on five main parameters: preferences regarding consumption and leisure, preferences regarding formal Vs. informal work, attitudes towards risks, the rate of time preference, and the distribution of an exogenous shock that affects movements in and out of the social security system (given individual decisions). The yearly household survey is used to create a pseudo panel by age-cohorts and estimate the joint distribution of model parameters based on a generalized version of the Gibbs sampler. The model does a good job in replicating the distribution of the members of a given cohort across states (in or out of the social security / active or retired). Because the parameters are related to individual preferences or exogenous shocks, the joint distribution is unlikely to change when the social insurance system changes. Thus, the model is used to explore how alternative policy interventions could affect behaviors and through this channel benefit levels and fiscal costs. The results from various simulations provide three main insights: (i) the Brazilian SI system today might generate distortions (lower savings rates and less formal employment) that increase the costs of the system and might generate regressive redistribution; (ii) there are important interactions between the unemployment benefits and pension systems, which calls for joint policy analysis when considering reforms; and (iii) current distortions could be reduced by creating an actuarial link between contributions and benefits and then combining matching contributions and anti-poverty targeted transfers to cover individuals with limited or no savings capacity.

Fuente: Banco Mundial
Clasificación: Seguridad Social y Sistemas de Pensiones
Tipo de Publicación: Documentos de Trabajo
Idioma:

Para visualizar el documento, clic aquí »

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