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Public Pension Reform: A Primer

Autor: Jousten, Alain
Año: 2007
Resumen: The present paper reviews key issues in pension design and pension reform encountered all across the world. The paper heavily refers to the recent U.S. Social Security reform debate in general and to the Personal Retirement Accounts proposal in particular. A particular emphasis is put on annuitization and risk-taking in the economy. Our discussion signals some inadequacy of the proposed measures with respect to the goals of viability of the system and individual financial security during retirement.

Fuente: Fondo Monetario Internacional (FMI)
Clasificación: Reformas de Pensiones
Tipo de Publicación: Documentos de Trabajo
Idioma:

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From Red to Gray: The "Third Transition" of Aging Populations in Eastern Europe and the Former Soviet Union

Autor: Chawla, Mukesh; Betcherman, Gordon; Banerji, Arup
Año: 2007
Resumen: This report focuses on the challenges that the region's aging countries will now face in having to deal with multiple transitions. It argues that their task ahead, though uniquely daunting, is by no means impossible. Indeed, many of the potential problems can be addressed through sensible and thoughtful policies that can be enacted over the next few years. The only danger likely lies in complacency, in not being proactive in addressing the challenges. This report finds, first, that some of the concerns about aging in Eastern European and Former Soviet countries are probably misplaced. Second, the analysis in the report validates concerns about future fiscal strains in some of the region's aging countries, but finds that many of the drivers of higher future public expenditures are unrelated to aging. This report is particularly focused on the future-a future in the region that is critically dependent on actions that countries and societies take now, and over the next few years. The report sends two central messages, which are analyzed against the different patterns of aging across the region. Red light to green light: Growing older does not have to mean growing slower. Aging is not a stop sign for growth-if countries enact policies that boost productivity and labor force participation. Red ink to black ink: Waging sensible policies can ease aging's spending impact. The policies needed to manage much of the expected jump in public spending-especially the impacts on pensions and on health care-are well known. They need only to be enacted and implemented.

Fuente: Banco Mundial
Clasificación: Demografía
Tipo de Publicación: Informes
Idioma:

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Assessing the Distortions of Mandatory Pensions on Labor Supply Decisions and Human Capital Accumulation: How to Bridge the Gap between Economic Theory and Policy Analysis

Autor: Bodor, András; Robalino, David; Rutkowski, Michal
Año: 2007
Resumen: Mandatory pension systems play a major role in individual savings and labor supply decisions. In particular, it is well known that defined benefit pension schemes, which are not actuarially fair, can create incentives for early retirement and therefore reduce labor supply and the stock of human capital in a given country. This is an important policy issue in middle-income countries, with still low participation rates in the labor force, where the "window" opened by the demographic transition is already closed or will close in the near future. In these countries, policies to stimulate private sector growth, competitiveness, and employment creation should be accompanied by policies that increase labor force participation, raising the ratio of active to inactive population and therefore the potential for higher income per capita growth. Unfortunately, the analytical tools developed to assess pension reform options tend to focus on the financial sustainability of the schemes and the adequacy of benefits. Little attention is given in practice to the social costs imposed by distortions on the supply of labor. In part, this is given by the lack of analytical tools that, in the context of limited information regarding individual preferences and behavior, can be used to assess the magnitude of these distortions. This paper develops methodologies that can bridge the gap between economic theory and the practices of pension policy personnel under conditions of deep uncertainty regarding the variables driving individual behavioral responses to policy changes. First, the paper develops an indicator to predict the age-specific retirement probabilities induced by a particular pension system, given heterogeneous individual preferences over risk, consumption, and leisure. The paper then describes how this indicator can be used to project the size of the labor force by gender, age and skill level and therefore the dynamics of human capital accumulation. The integration of these two analytical tools allow us to show the impact of a particular pension reform proposals on the dynamics of labor supply, human capital and, given the dynamics of capital and total factor productivity, economic growth. Furthermore, the paper develops a set of life-cycle income measures for typical individual paths that allow us to measure the contribution of segmented pension schemes to the segmentation of the labor market. The methods are applied to the case of Morocco.

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

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The Use of Derivatives to Hedge Embedded Options : The Case of Pension Institutions in Denmark

Autor: Ladekarl, Jeppe; Ladekarl, Regitze; Andersen, Erik Brink; Vittas, Dimitri.
Año: 2007
Resumen: The main purpose of this paper is to examine the growing use of derivatives by Danish pension institutions as a risk management tool to hedge embedded options on their balance sheets. Throughout the 1980s and 1990s it was a widespread practice for Danish pension institutions to guarantee a minimum interest rate on new pension policies. With the new millennium global interest rates declined steeply and equity markets came crashing down. Suddenly the guarantees on pension contracts were in the money. The policies already written could not be changed, leaving liabilities and assets mismatched, profits in the red, and capital reserves drained. Out of necessity, and in some cases virtue, Danish pension institutions turned in scale to derivatives, allowing for a more active approach to hedging, asset and liability management, and even profit generation. Through the use of derivatives, pension institutions have avoided the need to renegotiate their guaranteed contracts with policy holders. They have succeeded as an industry in transforming their pay-off curves and have emerged with better matched asset/liability positions and lower exposure to interest rate risk. But the expanded use of derivatives also raises some risk management and regulatory issues, such as operational and counterparty risks as well as effective internal control systems and regulatory oversight.

Fuente: Banco Mundial
Clasificación: Regulación y Supervisión
Tipo de Publicación: Documentos de Trabajo
Idioma:

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Aging, Asset Allocation, and Costs: Evidence for the Pension Fund Industry in Switzerland

Autor: Weber, Rene; Gerber, David S.
Año: 2007
Resumen: This paper focuses on the nexus between pension funds' balance sheet liabilities, reflecting their age profile and payments obligations, and the investment behavior and costs of these funds. The context of the analysis is the stringent regulatory framework and the highly fragmented and heterogeneous pension fund landscape in Switzerland. Detailed data from the Swiss Pension Statistic are analyzed using multivariate OLS-regressions. The evidence shows that a younger age structure and lower short-term benefits payouts are related to a higher share of equities and lower real estate holdings. Legal form, pension plan type, and size are important for administrative costs. The findings support the view that aging may lead to increased risk aversion and thus to a lower engagement of institutional investors in equities.

Fuente: Fondo Monetario Internacional (FMI)
Clasificación: Seguridad Social y Sistemas de Pensiones
Tipo de Publicación: Documentos de Trabajo
Idioma:

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