scholarly journals Public–private pension mixes in East Asia: institutional diversity and policy implications for old-age security

2018 ◽  
Vol 40 (3) ◽  
pp. 604-625 ◽  
Author(s):  
Chung-Yang Yeh ◽  
Hyunwook Cheng ◽  
Shih-Jiunn Shi
Keyword(s):  
Hong Kong ◽  
Old Age ◽  
Pension System ◽  
East Asian ◽  
Policy Implications ◽  
Private Pension ◽  
Institutional Characteristics ◽  
Private Pensions ◽  
Pension Systems ◽  
Old Age Security

AbstractPrevious studies of East Asian welfare regimes focus on similarities between social security schemes. In contrast, this paper explores cross-national variations in public–private pension mixes in six welfare states: China, Hong Kong, Japan, Singapore, South Korea and Taiwan. Our research echoes the pension policy analysis of international organisations but takes a step forward with emphasis on the historical and institutional characteristics of the respective pension systems. The analysis identifies three institutional patterns. First, the statist pension system (Taiwan and China) primarily relies on public pensions to provide old-age security, with private pensions playing a rather minor role. Second, in the dualist pension system (Japan and Korea) both public and private pensions work in parallel to ensure retirement income, though a clear security gap exists between workers in the formal and informal economies. Finally, the individualist pension system (Hong Kong and Singapore) is characterised by genuine fully funded individual accounts, emphasising citizens’ own responsibilities for ensuring old-age security. These three types of pension systems demonstrate distinct institutional characteristics and policy outcomes, illustrated by the juxtaposition of their institutional structures as well as by the comparison of key indicators collected from government reports and Organisation for Economic Co-operation and Development statistics. The paper concludes with a theoretical reflection of East Asian pension policies and a diagnosis of the distinct challenges confronted by each of the various pension patterns.

Private Pension Systems Built on Precarious Foundations: A Cohort Study of Labor-Force Trajectories in Chile

2019 ◽  
Vol 41 (10) ◽  
pp. 961-987 ◽  
Author(s):  
Ignacio Madero-Cabib ◽  
Andres Biehl ◽  
Kirsten Sehnbruch ◽  
Esteban Calvo ◽  
Fabio Bertranou
Keyword(s):  
Labor Force ◽  
Pension System ◽  
Decision Makers ◽  
Private Pension ◽  
Pension Systems ◽  
Old Age Security ◽  
Working Lives ◽  
Private And Public ◽  
Formal Employment ◽  
Pension Contribution

The success of private pension systems to provide old-age security is mainly a function of continuous individual pension contributions linked to formal employment. Using a rich longitudinal dataset from Chile and employing sequence analysis, this study examines the pension contribution histories and formal employment pathways of a cohort of individuals who began their working lives simultaneously to the introduction of the Chilean private pension system in the early 1980s, which pioneered private-oriented pension reforms worldwide. Results show that more than half of the individuals from this cohort developed labor-force trajectories inconsistent with continuous pension contributions and formal employment, which particularly affects women and lower educated people. We conclude that policy and decision makers focused on aging topics should be aware of the increasing diversity and precariousness of labor-force trajectories when evaluating the performance and sustainability of both private and public pension regimes.

Old Age Pensions

2018 ◽  
Author(s):  
Pierre Pestieau ◽  
Mathieu Lefebvre
Keyword(s):  
Old Age ◽  
Pension System ◽  
Labour Force ◽  
Labour Force Participation ◽  
Population Ageing ◽  
Pension Systems ◽  
Demographic Challenges ◽  
Old Age Poverty ◽  
Future Outcomes ◽  
Social Security Benefits

This chapter gives an overview of the type of pension system existing in Europe. Contributive and redistributive systems are opposed but the chapter shows that pension systems are more often a mix of both. The chapter shows how these systems have been more or less effective in tackling old age poverty in most countries and it points to the main challenges that these systems are facing, namely population ageing and low labour-force participation. The major reforms that have been implemented to ensure future sustainability of pension systems are presented but a number of additional changes that should be implemented are discussed. The chapter also presents projections for future outcomes and the link between demographic challenges and social security benefits is highlighted.

The transition to a multi-pillar pension system: the inherent socio-economic anomaly

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ishay Wolf ◽  
Jose Maria Caridad y Ocerin
Keyword(s):  
Income Inequality ◽  
Old Age ◽  
Pension System ◽  
Economic Loss ◽  
Pension Scheme ◽  
Total Contribution ◽  
Content Type ◽  
Pension Systems ◽  
High Earning ◽  
Minimum Pension

Purpose This paper aims to analytically show that in an over-lapping-generation (OLG) model, low earning cohorts bear unwanted risk and absorb higher economic cost than high earning cohorts do. Design/methodology/approach This paper aims to consider the individual's risk appetite, using a simple utility function, based on consumptions and discount rates in each period. This paper calibrates the model according to teh Israeli pension system as a representative of a small open developed organization for economic cooperation and development country. Israel is considered as unique case study in the pension landscape, as it implements almost pure defined contribution pension scheme with continuous trend of pension market capitalization (Giorno and Jacques, 2016). Hence, this study finds Israel suitable for examining the theoretical mix of pension scheme. That model enables exploring combined solutions for adequate old age benefits, involving the first and the second pension pillars, under fiscal constraints. Findings It comes out that for risk-averse individuals, the optimal degree of funding is negatively correlated to asset returns' volatility and positively correlated to earning decile level. The neglect of risk and individual's current earning level will thus overstate the contribution level and funded percentage from total contributions. Moreover, even in an economy with minimum government intervention, and highly developed private pension fund with high average of rate of return, the authors find it is optimal that the pension system contains a sizeable unfunded pillar. This paper innovates by revealing a socio-economic anomaly in design of mix pension systems in favor of high earning cohorts on the expense of economic loss of low earning cohorts. Practical implications The model presented in this paper could be implemented in countries with mix pension systems, as an alternative to public social transfers or means tested, alleviating poverty and inequality in old age. Additionally, this model could raise the public awareness of the financial sustainability of the unfunded pay-as-you-go pillar to diversify financial risk in pension systems, especially for low earning cohort in society. Social implications One area of research that is particularly relevant in this context concerns the issue of alleviating poverty and income inequality. It is often stressed that the prevention of old age poverty is among the central targets of well-designed pension system (Holzmann and Hinz, 2005). The conceptualization of minimum pension guarantee used in this composition allows to clearly capturing the notion of such a poverty and social targets as an integral part of the pension system rolls. Originality/value This paper innovates by revealing a socio-economic anomaly in design of mix pension systems in favor of high earning cohorts on the expense of economic loss of low earning cohorts. That comes to realize through the level of total contribution rates and funded share that are generally optimal for high earning cohorts but not for low earning cohorts. This paper identifies that the effect of anomaly is most significant in a market characterized with high income-inequality level. This paper finds that imposing intra-generational risk sharing instrument in the form of minimum pension guarantee can re-balance pension design among different earning cohorts. This solution demonstrates balancing effect on the entire economy.

scholarly journals Models of the pension system: international experience and local practice

2020 ◽  
pp. 43-51
Author(s):  
O. Cheberyako ◽  
V. Bykova
Keyword(s):  
United States ◽  
Hong Kong ◽  
Great Britain ◽  
Social Insurance ◽  
Pension System ◽  
The United States ◽  
Asian Countries ◽  
Private Pensions ◽  
Foreign Countries ◽  
National Models

The article substantiates the nature of the national models of the pension system and its structure in accordance with the concept of the Organization for Economic Co-operation and Development (OECD). The basis of the national models of pension system are two well-known models of social security: Bismarck and Beveridge Social Insurance Systems. Thus, authors prepared the comparison of this models. The features of pension system in the countries of Europe (Germany, Great Britain, Sweden, Poland), the United States and Chile are analysed. The analysis of the national models of the pension system in Asian countries identifies three institutional patterns: the statist pension system (Taiwan and China), the dualist pension system (Japan and Korea) and individualist pension system (Hong Kong and Singapore). Based on trends of development of pension provision in foreign countries, authors determine the main tasks and ways to improve the domestic system, namely, introduction mandatory funded pension system and reforming the voluntary private pensions insurance.

EFFECTS OF SOCIO-ECONOMIC FACTORS ON GOVERNMENTAL TAX EXPENDITURES FOR PRIVATE PENSIONS IN SELECTED OECD COUNTRIES

2019 ◽  
pp. 1-13
Author(s):  
BYUNG WOOK JUN ◽  
SOO JEAN PARK ◽  
SUNG MAN YOON
Keyword(s):  
Old Age ◽  
Pension System ◽  
Public Pensions ◽  
Economic Factors ◽  
Private Pensions ◽  
Tax Expenditures ◽  
Country Level ◽  
Tax Benefits ◽  
The Government ◽  
Socio Economic Factors

With the advent of an aging society all over the world, there has been a growing policy interest in the pension system that can guarantee old-age income at some level. Many countries also encourage people to join public pensions as well as private pensions. As a result, there has been a phenomenon of substituting private pensions. This study investigates the effects of various socio-economic factors on tax benefits for private pensions at the country level. The results of this study show that lower total income replacement rate of public pension and private pension assets leads to increasing tax expenditures on private pensions. And also, higher individual tax burden and governmental social welfare expenditure causes to increase tax expenditures on private pensions. Despite differences in the type of old-age income security systems by country, it is recognized that attempts to resolve the public pensions crisis caused by socio-economic changes take the form of expanding the roles of private pensions. So, this study provides politic implications that lower benefits from public pensions lead to expanded roles of private pensions supported by the government.

Moving between wage work and retirement – the commitment to wage work in later life in Hong Kong

2019 ◽  
Vol 15 (1) ◽  
pp. 64-80
Author(s):  
Yeuk Mui May Tam ◽  
Kam Wah Chan ◽  
Ka Man Lo
Keyword(s):  
Hong Kong ◽  
Filial Piety ◽  
Pension System ◽  
Later Life ◽  
Small Sample ◽  
Public Pension ◽  
Policy Implications ◽  
Content Type ◽  
Wage Work ◽  
Retirement Transition

Purpose Relatively few studies about retirement transition examine economies, where a public pension system is absent. This paper aims to fill this gap in the literature. Design/methodology/approach The present study draws on the stratification and risk society approach, as well as results from unstructured interviews with 12 Chinese in Hong Kong. Findings The analyses show that the retirement transition involves moving between different forms of wage work and non-work status. These moves were undertaken because of not only financial needs but also a strong desire to be a financially self-reliant and intrinsic commitment to employment. The authors argue that the desire and commitment to employment are shaped by the underdeveloped pension system, practical orientation towards traditional Chinese filial piety norms and personal work history. Research limitations/implications The current research covers only a very small sample and uses retrospective interviewing instead of a larger and/or representative sample using prospective panel interview. Nevertheless, the research carries theoretical and policy implications of the study on retirement transition and protection. Originality/value Few local studies track retirement transitions in the way similar to the current studies. Existing studies are mostly about advanced Anglo-Saxon economies with a long history of public pension, albeit reformed in recent year, in place. The current study adds to the general literature on retirement studies.

Pensions problems will await Chile's new government

2017 ◽  
Keyword(s):  
Social Movement ◽  
Pension System ◽  
Family Members ◽  
State System ◽  
Private Pension ◽  
The Political ◽  
Private Pensions ◽  
Content Type ◽  
Active Population ◽  
Political Spectrum

Subject The private pensions system. Significance Chile’s private pension system, once regarded internationally as a model to be imitated, has become a cause of widespread dissatisfaction at home. One important social movement is calling for a return to a state-managed pay-as-you-go system. There is consensus across the political spectrum that changes are required but intense disagreement as to the form they should take. Impacts Low pensions are increasingly affecting the active population through the economic difficulties of older family members. Without reform, the popular call of 'no more money for the AFPs' will continue to find an echo. The AFP-friendly attitude of the likely next centre-right government would increase demand for a return to a state system.

Financialisation and the Pension System: Lessons from the United States and the Netherlands

2017 ◽  
Vol 15 (4) ◽  
pp. 554-584 ◽  
Author(s):  
Natascha van der Zwan
Keyword(s):  
United States ◽  
The Netherlands ◽  
Pension System ◽  
The United States ◽  
Pension Funds ◽  
The State ◽  
Investment Strategies ◽  
Private Pensions ◽  
Labour Unions ◽  
Pension Systems

Financialisation and the Pension System: Lessons from the United States and the Netherlands The articles explores the financialisation of private pensions in the United States and the Netherlands. It proposes two distinct arguments. First, the article shows that both the American and the Dutch pension systems stand out internationally for their high degrees of capitalisation and the absence of substantive investment restrictions for pension funds. The article posits that both pension systems are highly financialised, yet the process of financialisation has proceeded along different historical paths and within different institutional contexts. Secondly, the article maintains that the financialisation of pension systems is accompanied by its own political dynamics. In both political economies, different groups of actors (employers, labour unions, financial professionals) have made claims over the growing concentration of pension assets. Here, particular emphasis is given to the role of the state. It shows how since the mid-1970s, both American and Dutch pension funds have altered their investment strategies, abandoning public debt as the dominant investment category. The article explains this change in terms of the rising popularity of modern portfolio theory and the immense growth of pension capital in need of new investment options. As austerity politics have made governments more dependent on financial markets, pension funds have become more assertive in leveraging their assets and demanding political reform which are in the interest of the financial industries. Financialisation has thus fundamentally altered the balance of power between the state and financial market actors.

scholarly journals The South African pension system

1998 ◽  
Vol 18 (6) ◽  
pp. 713-719 ◽  
Author(s):  
Valerie Møller
Keyword(s):  
South Africa ◽  
South African ◽  
Old Age ◽  
Security Policy ◽  
Pension System ◽  
Real Income ◽  
The South ◽  
Old Age Security ◽  
Social Pension ◽  
African Journal

A. Sagner. 1998. The 1944 Pension Laws Amendment Bill: old-age security policy in South Africa in historical perspective, ca. 1920–1960. Southern African Journal of Gerontology7, 1, 10–14.S. van der Berg. 1998. Ageing, public finance and social security in South Africa. Southern African Journal of Gerontology7, 1, 3–9.The latest issue of Southern African Journal of Gerontology traces the origins of the South African social pensions system and addresses contemporary issues. In her editorial, Monica Ferreira (1998) notes that South Africa is one of only two countries in Africa that operates a social old-age system. Although the value of the South African social pension system is low in terms of real income (R490 in July 1998 – approximately US$100), the pension is generous in comparison with other developing countries. The take-up rate of the pension is virtually 90 per cent in the case of Africans, who historically were the most disadvantaged group under apartheid.

Strengthening Market Principles in Welfare Institutions: How Hybrid Pension Systems Impact on Social-risk Spreading

2013 ◽  
Vol 42 (4) ◽  
pp. 665-683 ◽  
Author(s):  
PATRICIA FRERICKS
Keyword(s):  
Old Age ◽  
Social Protection ◽  
Pension System ◽  
Social Risk ◽  
Target Level ◽  
Pension Systems ◽  
The Past ◽  
Welfare Institutions ◽  
Risk Spreading

AbstractIn the past two decades, the question of how pension systems should be designed to offer ‘adequate and sustainable pensions for all’ has been raised. As a result, European pension systems, in which market principles in general have played a marginal or even negligible role in the past, were redesigned, with market-based pensions becoming part of the pension calculation norm, i.e. the institutionalised and nationally defined target level for old-age protection. However, since the hybrid pension systems are institutionalised very differently, pension systems’ ingredients, characteristics and nexus are far from being homogeneous, and the role of market principles in hybrid systems differs. These differences significantly determine the degree of social protection of the various social citizens and the number of future pensioners with adequate pensions. An illustrative comparison of the contrasting Dutch and German institutional setups indicates differences in the manner in which market principles have been strengthened in the pension system, and the related effects these differences have on social-risk spreading.

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