Iceland's New Plan for Debt Relief: Jubilee or Waiting for Godot?

2014 ◽  
Vol 5 (4) ◽  
pp. 517-530
Author(s):  
Maria Elvira Méndez Pinedo
Keyword(s):  
Pension System ◽  
Pension Reform ◽  
Debt Relief ◽  
Economic Recovery ◽  
European Law ◽  
Future Scenario ◽  
The Public ◽  
Long Run ◽  
Waiting For Godot ◽  
Loan System

Despite Iceland's economic recovery, nearly 48% households continue to struggle to make ends meet. This study argues, first, that the main reason behind over-indebtedness in this country is a loan system without parallel in Europe, based on a triple cost of credit (fix/variable interest, indexation of credit to inflation and negative amortization). Second, the problem is examined in the context of European law as some alleged malpractices of indexation have been referred to the EFTA Court. Third, the focus shifts to the debt-relief programme presented by the Icelandic government in 2013/2014 after the relative failure of previous debt-relief measures. It is argued that this plan will fail in the long run as long as the indexation of credit to inflation is not abolished. The private pension system in Iceland relies indirectly on indexed mortgage credit issued by the public Housing Financing Fund. Since a ban on indexation and a holistic pension reform are not expected soon, all present debt write off benefits will surely be eaten up by higher inflation. As long as indexation of credit is legal, the future scenario resembles less a debt-relief jubilee and more the theater play “Waiting for Godot ”.

scholarly journals Old-age provision in transition: the case of Croatia

2018 ◽  
Vol 17 (4) ◽  
pp. 576-593 ◽  
Author(s):  
MARTIN WERDING ◽  
MARKO PRIMORAC
Keyword(s):  
Old Age ◽  
Economic Crisis ◽  
Future Development ◽  
Central Government ◽  
Pension System ◽  
Financial Strain ◽  
The Public ◽  
Long Run ◽  
Potential Impact ◽  
Old Age Provision

AbstractLike in a number of other transition countries, the Croatian pension system comprises a traditional public pay-as-you-go scheme and a mandatory funded scheme (second pillar) that will provide increasing amounts of supplementary pensions to those entering retirement in the future. Due to the continuing economic crisis, the public scheme is currently under enormous financial strain, with a sizeable impact on central government finances. At the same time, the level of benefits deriving from the overall system is likely to become inadequately low in the long run. In this paper, we describe the existing system and project its future development under current rules. We also discuss options for further reforming the system and highlight their potential impact on pension finances, public budgets and retirement incomes, as this may provide lessons, which are of interest elsewhere.

scholarly journals PROS AND CONS OF PENSION REFORM- GEORGIAN CASE

2020 ◽  
pp. 91-95
Author(s):  
ZURAB MUSHKUDIANI ◽  
DAVID MAMRIKISHVILI ◽  
IRAKLI GACHECHILADZE
Keyword(s):  
Current Issue ◽  
Pension System ◽  
Pension Reform ◽  
Economic Environment ◽  
The Public ◽  
Long Time ◽  
Heavy Burden ◽  
Pros And Cons ◽  
State Pension ◽  
Over Time

The paper studies pension reform in Georgia which has been going on since the 1990s, evolving over time and taking a modern look. The axiom is that the pension system in our country needed to be upgraded. The discussion on the current issue has been going on for a long time and the topic does not lose its relevance today. The establishment of a liberal economic environment can be considered as the basis for the accumulation of «accumulated pensions» in our country. Like all recent reforms, there are supporters and opponents of the reform, but unfortunately, for a number of reasons, the public expresses distrust and views the reform as a step backward. It is clear that pensioners› reliance on the basic state pension is a heavy burden for the country›s budget.

scholarly journals Impact Of Retirement Benefit Act (RBA) On Investment Returns To Pension Funds In Kenya

2010 ◽  
Vol 9 (4) ◽  
Author(s):  
Lucy Jepchoge Rono ◽  
Julius Kibet Bitok ◽  
Gordon N Asamoah
Keyword(s):  
Pension System ◽  
Pension Reform ◽  
Pension Funds ◽  
Insurance Fund ◽  
Retirement Benefits ◽  
Fund Managers ◽  
Long Run ◽  
Investment Returns ◽  
Mean Differences ◽  
The Impact

This study focused on the analysis of the impact of RBA guidelines on the return on investments of both pension funds under management and those for pension schemes. A random sample of 175 fund trustees and a census of 13 fund managers from registered fund management companies participated in the survey. The questionnaire was administered through the drop-and-pick method. Data were analyzed using SPSS (Statistical Package for Social Sciences) and summarized in descriptive statistics, such as mean, standard deviation, frequencies, percentages, and t-tests for mean differences were used. The study determined that annual investment return for retirement benefits schemes in the past three years ranged between 10 and 27.52%, sometimes falling below the annual inflation.  The Kenya pension funds are in compliance with the prescribed broad guidelines with regard to maximum percentages of total asset value of fund by the RBA Act. They are, however, moderately in compliance with the regulations requiring that that they maintain an actuarial solvency of 80% and above. The overall weighted returns before the implementation of RBA Guidelines was low (average scale of 1.9) while the weighted returns after the implementation of RBA Guidelines was high, at an average scale of 3.7. An analysis of the trend, however, showed that long-run performance has slowed down. The highest growth was realized for mortgage and cash returns as opposed to rights issues and bonus shares. There is need to fashion out the appropriate mix of reforms suitable for Kenya that will ensure the long-run sustainability of its pension systems. The challenge is for the country to adopt a unified, harmonized, and transparent regulatory framework that will integrate the pension system in order to ensure sustainability in its financing and mobilizing of adequate funds to cater for the ever-increasing population of beneficiaries in this regard, comprehensive pension reform policy with wider target radar and one that will consolidate and harmonize the various legislations touching on retirement benefits industry in line with Retirement Benefits Act. The Regulator needs to implement measures to ensure pension funds are insulated from inflationary and other risks.  An effective way is to institute a pension risk insurance fund that will underwrite and compensate such losses as will be prescribed. Further, there is need for a systematic indexation of benefits to inflation. RBA should strengthen its compliance and enforcement function in order to ensure that it appropriately deals with emerging present and future regulatory challenges.

scholarly journals Reform of Healthcare and Pension Systems in Chile (Conclusions for Poland)

2011 ◽  
Vol 14 (2) ◽  
pp. 41-60
Author(s):  
Ryszar Piasecki
Keyword(s):  
Health Reform ◽  
Pension System ◽  
Pension Reform ◽  
Public Hospitals ◽  
Medical Doctors ◽  
The Public ◽  
Pension Systems ◽  
Public Pension System ◽  
The World ◽  
State Subsidies

Health reform in Chile attemps to improve healthcare of the citizens. The authorities of the country managed to combine both the private (ISAPRE) and public systems FONASA). The biggest success was the creation of AUGE (state subsidies for 66 diseases). The unsolved problems are as follows: long waiting lists and shortages of beds in public hospitals, shortage of medical doctors and specialists. As far as the pension reform is concerned Chile was the first state in the world which in 1981 totally privatized the public pension system. Unfortunately, the fruit of changes in Chile is less optimistic (extremely low pensions) than it was initially assumed. According to specialists the only chance for a correct work of the pension system is introduction of the system which would combine two forms, i.e. a state intergenerational agreement and capital system.

scholarly journals Fiscal effects of the Norwegian pension reform – A micro–macro assessment

2017 ◽  
Vol 18 (1) ◽  
pp. 88-123 ◽  
Author(s):  
DENNIS FREDRIKSEN ◽  
ERLING HOLMØY ◽  
BIRGER STRØM ◽  
NILS MARTIN STØLEN
Keyword(s):  
Labour Supply ◽  
Pension System ◽  
Pension Reform ◽  
Fiscal Sustainability ◽  
Microsimulation Model ◽  
Fiscal Impact ◽  
Cge Modelling ◽  
Long Run ◽  
Norwegian Population

AbstractThe main goal of the Norwegian pension reform of 2011 is to improve long run fiscal sustainability, not least through stronger labour supply incentives. We assess to what extent the reform is likely to live up to these intentions. To this end we combine a dynamic microsimulation model, which includes a complete description of the Norwegian population and the pension system, with CGE-modelling of the effects on all government revenues and expenditures. We find that the reform is likely to make a great fiscal impact in the long run, and higher employment plays an important role in this respect.

An assessment of the 2011 Spanish pension reform using the Swedish system as a benchmark

2013 ◽  
Vol 13 (3) ◽  
pp. 297-333 ◽  
Author(s):  
CARLOS VIDAL-MELIÁ
Keyword(s):  
Pension System ◽  
Pension Reform ◽  
Lessons Learned ◽  
Short Term ◽  
The Public ◽  
Public Pension System ◽  
Actuarial Fairness ◽  
The Us ◽  
Quantitative Analyses

AbstractThe aim of this paper is to make an assessment of the 2011 reform of the public pension system in Spain using the Swedish pension system as a benchmark, although some reference to the US pension system is also made. The paper focuses on the reform, explaining its aims, breaking down the main contents, critically examining the official view and describing the expected ageing of the Spanish population. This approach complements the quantitative analyses performed by other researchers and will enable us to assess the reformed system with the focus on four main areas: actuarial fairness, actuarial transparency, solvency and communication with the public. The main conclusion is that the reform was a wasted opportunity given that Spain did not take advantage of the lessons learned in Sweden, it did not include any elements for improving the management of pay-as-you-go systems, and there is no sound basis for claiming that the system's sustainability is assured in the medium term, the long term or even the short term. The new parametric reforms currently under consideration in Spain are targeted to correct some of the pension system's design faults that have been highlighted in this paper.

Zur Rentenproblematik: Lösungswege und Reformvorschläge

2001 ◽  
Vol 50 (2) ◽  
Keyword(s):  
Pension System ◽  
Pension Reform ◽  
Married Couples ◽  
Developed Countries ◽  
Pension Scheme ◽  
National Account ◽  
Demographic Development ◽  
Long Run ◽  
The Future ◽  
Uniform Taxation

AbstractThis economic policy forum is assigned to the problems of pensions. Eckart Bomsdorf remarks that the pension scheme system in Germany will be stretched to its limit in the future. Like in many other highly developed countries, the reason for this is the demographic development. The number of people who receive pensions is increasing, while the number of contributors is stagnating or even decreasing. The latest pension reforms try to counteract this development. They will work until 2010, after this, however, these measures will not be sufficient to secure Germany’s pension system. Some additional measures can make the statutory pension system in Germany fit for the future. Increasing the retirement age and a new pension formula, which takes the demographic development into consideration sufficiently, are of particular importance.In his contribution, Axel Börsch-Supan states that after the Pension Reform 2000 has successfully passed both chambers of the German parliament, the German pension system still rests mainly on an expanding pay-as-you-go financing mechanism. He argues that the long-run stabilization of the German pension system will need further reform steps with three main elements: (1) A reformed pay-as-you-go pillar which is actuarially fair, features a transparent national account set-up, and freezes contribution rates; (2) A deeper second funded pillar which is based on US 401(k)-style grouped accounts that finances the impending aging burden; (3) An internally consistent regulatory framework for the German capital market including uniform taxation of all retirement savings according to the EET principle.The topics of Friedrich Breyers contribution are often neglected elements of the pension reform: dependents relief and pension splitting within the social security system. The reform introduces the choice of splitting, where each spouse receives half of the total pension claims, which both have acquired during the marriage. The author asks whether the method of income tax splitting should be applied to the health insurance as well as the pension system in order to strengthen the equivalence principle. It is shown that only with mandatory splitting in the pension system the preferential treatment of married couples as opposed to singles would be eliminated.

scholarly journals Analysis of Reforming the Pension System of Ukraine: Implementation Problems and Development Prospects

2020 ◽  
pp. 155-160
Author(s):  
O. Poznyakova ◽  
◽  
N. Panchuk ◽  
O. Burtseva ◽  
◽  
...  
Keyword(s):  
Financial Stability ◽  
Social Insurance ◽  
Pension System ◽  
Pension Reform ◽  
The Public ◽  
Strategic Goals ◽  
Implementation Problems ◽  
Further Development ◽  
Development Prospects

Pension provision is an element of the pension system that ensures sustainable socio-economic development of the state as a whole. The article discusses the current problems of the pension system in Ukraine, ways to overcome and directions for its improvement. Determination of the further development and reform of the pension system aimed at ensuring the financial stability of the solidarity system. Introduction of the development of the pension system, taking into account the peculiarities of the current situation in the country, ways of reforming social insurance. The compulsory accumulative pension system is considered. Its introduction to retirees for two centuries. The advantages of the funded system, what it is based on, and its main contingent of citizens are analyzed. Principles of pension accrual, pension entitlements, old-age pensions, pension transfer, minimum and maximum pension in the course of reforms. Analyzed, introduced by introducing amendments to some legislative acts of Ukraine regarding the increase in pensions. The demographic state of the population is considered. The article proves that the main strategic directions for improving the pension reform is the introduction of changes in the demography of the population; percentage of ERUs, when calculated for each entrepreneur separately (respectively, from the group of an individual entrepreneur to the type of activity); open your deposit account for the savings system in the public domain; to enable pensioners to work (to improve their knowledge with practitioners, to provide an opportunity to work with modern equipment, programs) to determine the dates for the introduction of the second level and the age category of participants; to establish and improve the work of the organization of pension provision; to show confidence in the reforms of the Pension Fund bodies to the population. Nowadays, constant monitoring of the achievement of the strategic goals of the reform of the pension system and pension provision and the adoption of fundamental decisions to overcome strategic gaps is quite an urgent issue and requires further research.

Sign in / Sign up

Export Citation Format

Share Document