Dismantling an Earnings-Related Social Pension Scheme: Germany's New Pension Policy

2007 ◽  
Vol 36 (2) ◽  
pp. 319-340 ◽  
Author(s):  
WINFRIED SCHMÄHL
Keyword(s):  
Old Age ◽  
Pension Reform ◽  
Income Smoothing ◽  
Pension Scheme ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Pension Policy ◽  
Pension Insurance ◽  
Social Pension ◽  
The Social

A paradigm shift in pension policy decided by the German red–green coalition government will considerably affect the level and structure of pension benefits as well as the mix of public and private old-age security arrangements. The article starts with a brief outline of the pension schemes as they had been designed before the recent decisions, and with a few remarks on the reasons for current reform debates. The major measures of the 2001 Pension Reform are then described. The focus of the article is on the effects of the reform for (personal) income distribution and institutional design. A partial shift from (mandatory) public (pay-as-you-go financed) pensions to (voluntary) private (capital-funded) pensions and from defined benefit towards defined contribution will, among other things, reduce the benefit level in the social pension insurance. A large number of contributors – even after many years of paying contributions – will only receive benefits below the social assistance level. It can be expected that this development will transform the present earnings-related statutory pension scheme – which has a strong contribution–benefit link and is aimed at income smoothing over the lifecycle – into a basic, highly redistributive pension scheme, aimed mainly at avoiding poverty. Income inequality in old age is expected to increase as a result of the new strategy in pension policy.

scholarly journals REFORMS OF FINANCING PENSION INSURANCE SYSTEM IN CONDITIONS OF TRANSITION

2017 ◽  
Vol 1 (12) ◽  
pp. 51
Author(s):  
Aleksandar Stojanović
Keyword(s):  
Old Age ◽  
Pension System ◽  
Pension Reform ◽  
Current System ◽  
Intergenerational Solidarity ◽  
Pension Insurance ◽  
Current State ◽  
The Social ◽  
Pension Insurance System

A serious crisis of the pension system has been present in Bosnia and Herzegovina, as well as in many other countries for many years. The current system, which functions on the concept of intergenerational solidarity is financially unsustainable, due to negative demographic and economic movements, as well as reduced number of the employed, and an increase in the number of pensioners. As the main objective of the pension system (the social security of citizens, ie protection against the risk of old age, disability and death) is not fulfilled, it seems that the reform of the pension system is necessary. It is necessary to answer the question: how to transform the pension system of intergenerational solidarity in a system of individual capitalized savings in a socially painless and affordable way?! The implementation of the pension reform aims to establish a long-term sustainable pension system that will provide quality protection from risk, old age, death, disability, and at the same time be consentaneous with economic and demographic movements andensure an adequate level of benefit to citizens in the later age.The aim of the paper is to define the wider, objective picture of the current state of the position of the pension system, as well as providing basic guidelines for the reform and development courses in the future.

scholarly journals Development of service pension policy in Latvia from 1996 until 2016

2018 ◽  
Vol 51 ◽  
pp. 03011
Author(s):  
Inese Upite ◽  
Feliciana Rajevska
Keyword(s):  
Social Insurance ◽  
Pension System ◽  
Pension Scheme ◽  
Policy Planning ◽  
Pension Policy ◽  
State Budget ◽  
Pension Schemes ◽  
Social Pension ◽  
The Social ◽  
The Government

The government made a decision to terminate the development of the service pension in 1997. However, during 1998–2016 the scope of service pension beneficiaries was extended. Thereby along with the overall social insurance pension system, the social pension scheme has been established and developed for a certain range of people funded by the state budget – the system of the service pension. The aim of the article is to explore the development of the service pension policy during 1996–2016. To accomplish it, in the framework of the study concepts related to the service pensions and the tendencies of reformation of the service pension schemes were studied. The international practice and the experience of several countries were explored, as well as the analysis of legal acts, policy planning papers and statistics was performed. The purpose of the service pension has changed and diversified, moreover, the issues regarding the service pension coverage are promoted by a group of politicians, escaping a wider discussion in public and even in the government.

GROWTH, PENSIONS, AND THE AGING JONESES

2011 ◽  
Vol 16 (1) ◽  
pp. 35-60 ◽  
Author(s):  
Walter H. Fisher ◽  
Ben J. Heijdra
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Pension System ◽  
Pension Reform ◽  
Mortality Rates ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Pension Policy ◽  
Balanced Growth

We incorporate keeping-up-with-the-Joneses (KUJ) preferences into the Blanchard–Yaari framework and develop a model of balanced growth. In this context we investigate status preference, demographic shocks, and pension policy. We find that a higher degree of KUJ lowers economic growth, whereas, in contrast, a decrease in the fertility and mortality rates increase it. In the second part of the paper we extend the model by incorporating a pay-as-you-go (PAYG) pension system with a statutory retirement date. The latter implies that the growth rate is higher under PAYG. We also consider the implications of pension reform under both defined benefit and defined contribution schemes.

scholarly journals A Comparison of Lithuanian and Swedish Old Age Pension Systems

Ekonomika ◽  
2019 ◽  
Vol 98 (1) ◽  
pp. 38-59
Author(s):  
Teodoras Medaiskis ◽  
Šarūnas Eirošius
Keyword(s):  
Old Age ◽  
Point Of View ◽  
Defined Contribution ◽  
Pension Policy ◽  
Pension Systems ◽  
The Social ◽  
Swedish Experience ◽  
Notional Defined Contribution ◽  
And Performance ◽  
Definition Of

[full article and abstract in English] The aim of this study is to compare Lithuanian and Swedish pension systems from the point of view of their design and performance in order to elaborate reasonable recommendations to Lithuanian pension policy based on the best Swedish experience. Swedish income, premium and guaranteed old-age pensions system are compared with the analogous Lithuanian system of the “first,” “second” pillars and the “social” pensions. The main features of the systems are discussed, and the performance of the systems, mainly from the point of view of adequacy, is compared. The differences in system design and performance are identified, and the possible reasons of these differences are examined. Special attention is paid to differences in financing and the approach to the definition of benefits. The Lithuanian pension points approach is compared to the Swedish Notional Defined Contribution (NDC) approach. Each system is analyzed, and the relevance of transforming the Lithuanian first pillar pensions into a NDC system is examined.

scholarly journals Addressing Longevity Risk: How Best to Annuitize Defined Contribution Assets?

2020 ◽  
Vol 4 (Supplement_1) ◽  
pp. 686-686
Author(s):  
Alicia Munnell ◽  
Gal Wettstein ◽  
Wenliang Hou
Keyword(s):  
Social Security ◽  
Longevity Risk ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Economics Of Aging ◽  
Distribution Rules ◽  
Lifetime Income ◽  
The Social ◽  
Defined Benefit Pensions ◽  
Deferred Annuity

Abstract Unlike defined benefit pensions, 401(k) plans provide little guidance on how to turn accumulated assets into income. The key risk that retirees face is outliving their assets. Insurance against such risk is available through several routes, including immediate annuities, deferred annuities, and additional Social Security through delayed claiming. Under this Social Security bridge option, participants would tap their 401(k) for payments equal to their Social Security to delay claiming. This paper compares these three options in simulations against a baseline in which no assets are used to obtain lifetime income. In each option, assets not allocated to purchasing lifetime income are consumed following the Required Minimum Distribution rules. The analysis finds that, when market and health shocks are included alongside longevity uncertainty, the Social Security bridge option is generally the best for households with median wealth. Wealthier households can benefit from combining the bridge option with a deferred annuity. Part of a symposium sponsored by the Economics of Aging Interest Group.

scholarly journals Problems of implementation of the constitutional complaint in Ukraine and ways to resolve them

2020 ◽  
pp. 93-99
Author(s):  
Oksana Shcherbanyuk
Keyword(s):  
Social Issues ◽  
Constitutional Court ◽  
Pension Insurance ◽  
Social Pension ◽  
European Experience ◽  
The Social ◽  
Legal Effect ◽  
Protection Of Human Rights ◽  
Administrative Proceedings ◽  
The Right

The article explores the problems of implementation of the constitutional complaint in Ukraine and proposes ways of its solving. The article analyses the jurisprudence of the Constitutional Court of Ukraine clarifies the admissibility criteria of the constitutional complaint in Ukraine, the procedural filters and proposed solutions of problems to improve the protection of rights and lawful interests of persons. The analysis of the content of the constitutional complaint indicates that the Constitutional Court of Ukraine is most often addressed the citizens of Ukraine with a petition regarding the implementation of the right of everyone to judicial review (in particular, cassation in cases of minor difficulties in administrative proceedings). Also appealed to the citizens with constitutional complaints in relation to social issues to protect their rights stipulated in the legislative acts that have undergone changes, in particular, with respect to the social (pension) insurance of certain categories of citizens (police, military, civil servants, prosecutors). While the Board and the Senate of the Constitutional Court of Ukraine often refused to open constitutional proceedings on the grounds of inadmissibility of the constitutional complaint (paragraph 4 of article 62 of the law of Ukraine on the constitutional Court of Ukraine), which is indicated at 136 decisions of Collegium of judges and 8 resolutions of the Senates. It is concluded that the mechanism of the submission and consideration of the constitutional complaint, the algorithm of selection (filtering) of the constitutional complaints needs significant improvement with consideration for the European experience. In our opinion, the legal effect of the constitutional-legal institution will be made only in connection with the introduction of a complete, not normative constitutional complaint, which will significantly increase the responsibility of subjects of law-making, law enforcement, protection of human rights and ensure the authority of the Constitution of Ukraine.

Retirement concerns and financial literacy in Brunei

2020 ◽  
Vol 40 (3/4) ◽  
pp. 342-365
Author(s):  
Pg Md Hasnol Alwee Pg Hj Md Salleh ◽  
Roslee Baha
Keyword(s):  
Financial Literacy ◽  
Home Ownership ◽  
Pension Reform ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Content Type ◽  
Financial Advice ◽  
Knowing How ◽  
Retirement Plan

PurposeDespite the inclusion of financial literacy in retirement studies, there are limited studies that look into retirement concerns and how financial literacy plays a role in managing retirement concerns. Understanding retirement concerns prior to retirement is important given how it affects retirement satisfaction. Therefore, this paper aims at assessing the retirement concerns in Brunei and the role of financial literacy in managing those concerns.Design/methodology/approach700 government employees, divided into three groups, were interviewed: Defined Contribution Plan (DCP) employees retiring in the next 10–15 years, DCP employees retiring in 20–30 years' time and Defined Benefit Plan (DBP) employees retiring in the next 10 years. Pearson's chi-square tests and logistic regressions were used to ascertain significant relationships.FindingsThe results indicate the relatively younger DCP group is more likely to be financially literate compared to senior groups however, these respondents are more inclined to focus on private home ownership at this juncture. The findings also indicate the importance of knowing how much to save for retirement towards determining those with an additional retirement plan, and consequently reducing their retirement concerns. The value of financial advice is also significant in determining the amount to save for retirement and in possessing an additional retirement plan.Research limitations/implicationsResults cannot be generalised to the population, as purposive sampling was utilised due to the absence of a population frame.Practical implicationsThe implications of the paper may provide value to policymakers to consider approaches to enhance the quality of financial advice and provide sound knowledge in computing the amount needed for retirement. Understanding the role of financial literacy vis-à-vis retirement concerns may also be useful for neighbouring countries with similar socio-cultural aspects such as Malaysia.Originality/valueGiven the limited research on retirement concerns and financial literacy, this paper is one of the few to emphasise on the importance of knowing how much is needed to save for retirement, in relation to retirement concerns. This may also be useful in other countries/communities with similar retirement context such as those with relatively low retirement planning or with similar retirement schemes. Further, with the 1993 pension reform, there is no known publication on retirement concerns and expectations in Brunei. Left unchecked, it may lead to poverty in old age and/or dependency on welfare institutions and family support.

scholarly journals Contribution volatility and public pension reform

2017 ◽  
Vol 17 (4) ◽  
pp. 513-533 ◽  
Author(s):  
TRAVIS ST. CLAIR ◽  
JUAN PABLO MARTINEZ GUZMAN
Keyword(s):  
Local Governments ◽  
Pension System ◽  
Pension Reform ◽  
Pension Plans ◽  
Fiscal Sustainability ◽  
Economic Downturn ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Unfunded Liabilities

AbstractIn the wake of the economic downturn of 2008–2009, researchers and policymakers have focused considerable attention on the extent of unfunded liabilities in US public sector pension plans and the implications for the long term fiscal sustainability of state and local governments. In response to the growth in liabilities, many states have introduced legislation that cuts back on defined benefit (DB) plan commitments, in some cases even shifting the pension system from a DB to a defined contribution or hybrid plan. This paper explores the factors that have led states to engage in pension reform, focusing particular attention on one factor that has only recently gained attention in the research literature: contribution volatility. While unfunded liabilities have significant long-term solvency implications, in the short term fluctuations in the amount of required contributions pose substantial difficulties for the ability of plan sponsors to balance budgets and engage in strategic planning. We begin by quantifying the volatility in the required contributions US states were expected to make between 2001 and 2013 and comparing the volatility of pension spending to other relevant tax and spending measures. Next, we describe the various types of pension reforms that states have implemented and examine the fiscal pressures facing those states that have engaged in reform. States with greater fluctuations in their required payments have been more likely to reduce benefits and increase employee contributions; they have also been more likely to institute these reforms sooner.

scholarly journals Are Old-age Pension System Reforms Moving Away from Individual Retirement Accounts in Latin America?

2010 ◽  
Vol 39 (2) ◽  
pp. 223-234 ◽  
Author(s):  
ESTEBAN CALVO ◽  
FABIO M. BERTRANOU ◽  
EVELINA BERTRANOU
Keyword(s):  
Latin America ◽  
Old Age ◽  
Latin American ◽  
Poverty Reduction ◽  
Pension System ◽  
Pension Reform ◽  
Pension Policy ◽  
Individual Retirement Accounts ◽  
New Politics ◽  
Retirement Accounts

AbstractThis article reviews two rounds of pension reform in ten Latin American countries to determine whether they are moving away from individual retirement accounts (IRAs). Although the idea is provocative, we conclude that the notion of ‘moving away from IRAs’ is insufficient to characterise the new politics of pension reform. As opposed to the politics of enactment of IRAs of the late twentieth century, pension reform in Latin America in recent years has combined significant revival of public components in old-age income maintenance with improvement of IRAs. Clearly, the policy prescriptions that were most influential during the first round of reforms in Latin America have been re-evaluated. The World Bank and other organisations that promoted IRAs have recognised that pension reform should pay more attention to poverty reduction, coverage and equity, and to protect participants from market risks. The experience and challenges faced by countries that introduced IRAs, the changes in policies by international financing institutions, and the recent financial volatility and heavy losses experienced in financial markets may have tempered the enthusiasm of other countries from applying the same type of reforms. Scholars and policy-makers around the globe could benefit from looking closely at these changes in pension policy.

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