The Long-Term Financial Sustainability of the Civil Service Pension Scheme in Malaysia

2019 ◽  
Vol 18 (1) ◽  
pp. 155-178
Author(s):  
Sheila Rose Darmaraj ◽  
Suresh Narayanan
Keyword(s):  
Civil Service ◽  
Pension Scheme ◽  
Retirement Age ◽  
Financial Sustainability ◽  
Defined Benefit ◽  
Contribution Rate ◽  
Replacement Rate ◽  
Deficit Model ◽  
Pension Payments

The civil service pension scheme (CSPS) in Malaysia is a defined benefit (DB), non-contributory system directly funded from the budget. An aging population, rising life expectancy, and ballooning pension payments underscore the need for reform. An annual pension deficit model was used to estimate the pension deficit over a period of 75 years under eight scenarios that compare the current scheme with changes in the pension deficit when three policy variables—retirement age, contribution rate, and replacement rate—are manipulated. We found the current scheme will not be financially sustainable. By increasing the retirement age, introducing employee contributions, and reducing the replacement rate, it is possible to delay the emergence of deficits and lengthen the period of sustainability of the scheme. However, a radical makeover is necessary to be fully sustainable and this might not be politically feasible.

Pension Reform in Russia: Assessing the Susceptibility of GDP Production to a Shift in the Number of the Working-Age Population

2019 ◽  
pp. 80-86
Author(s):  
T. P. Skufina ◽  
S. V. Baranov
Keyword(s):  
Pension Reform ◽  
Fixed Capital ◽  
Economic Effects ◽  
Pension Scheme ◽  
Retirement Age ◽  
Working Age ◽  
Working Age Population ◽  
Long Term Forecasting ◽  
The Impact

The presented study considers the susceptibility of gross domestic product (GDP) production to a shift in the number of the working-age population due to an increase in retirement age starting with 2019.Aim. The study aims to examine the quantitative assessments of GDP production in Russia with allowance for the changes in the number of the working-age population due to an increase in the actual retirement age.Tasks. The authors forecast the number of the working-age population with allowance for an increase in the retirement age; develop a model to establish a correlation between the number of the workingage population, investment in fixed capital, and GDP production; quantify the impact of the shift in the number of the working-age population on GDP production in Russia. Methods. This study is based on the results of modeling and long-term forecasting.Results. An economic-mathematical model to establish a correlation between the number of the working-age population, investment in fixed capital, and GDP production is presented. To specify the economic effects of a shift in the number of the working-age population due to an increase in the retirement age, Russia’s GDP production is forecasted for the “old” and “new” (increased retirement age) pension scheme. The forecast is provided for three variants of the number of the working-age population.Conclusions. It is found that with the “old” pension scheme with a lower retirement age GDP production across all three variants will decrease by 2036 compared to 2017. With regard to the “new” scheme that increases the retirement age, it is concluded that an increase in the retirement age is a factor that facilitates GDP production. However, its effect on economic growth will be insignificant.

scholarly journals What Will Retirement Pensions Be Like? Analysis of Spanish Future Pensioner Households in Terms of Poverty

2021 ◽  
Vol 13 (4) ◽  
pp. 1760
Author(s):  
Blanca Urbano ◽  
Antonio Jurado ◽  
Beatriz Rosado-Cebrián
Keyword(s):  
Pension System ◽  
Defined Benefit ◽  
Replacement Rate ◽  
Retirement Pension ◽  
Poverty Risk ◽  
Current Formulation ◽  
The Future ◽  
The One ◽  
The Eu

The Spanish public retirement pension system, the same as that of many European countries, faces two important risks in the long term. On the one hand, the sustainability of the current pay-as-you-go system and, on the other hand, the ability to maintain an acceptable standard of living for the retired population. This paper presents a study on the current situation of the Spanish public retirement pension system and its effect on the future retired population. In recent years, the concern for the long-term sustainability of the system, which is based on pay-as-you-go and defined benefit, has been very present. For this reason, two major reforms were carried out in 2011 and 2013; however, different investigations have indicated the reduction in future retirement pensions as a possible consequence. Regarding this dilemma, this paper aims to study the future poverty risk of the retired population due to the current formulation of the system, by conducting, for this purpose, an analysis of the purchasing power of future pensioners based on the EU-Statistics on Income and Living Conditions (SILC) 2016 of the National Institute of Statistics of Spain. As a result, a future reduction in the replacement rate was observed, affecting the younger population to a greater extent, as well as an increase in poverty in pensioner households using two different scenarios.

scholarly journals Dynamic Programming Approach to Pension Funding: the Case of Incomplete State Information

2002 ◽  
Vol 32 (1) ◽  
pp. 129-142 ◽  
Author(s):  
S. Haberman ◽  
Joo-Ho Sung
Keyword(s):  
Pension Scheme ◽  
Programming Approach ◽  
Occupational Pension ◽  
Defined Benefit ◽  
Contribution Rate ◽  
State Information ◽  
Dynamic Programming Approach ◽  
Stochastic Inputs ◽  
Investment Returns ◽  
Control Procedures

AbstractHaberman and Sung (1994) have presented a dynamic model for a defined benefit occupational pension scheme which considered two types of risk: the “contribution rate” and the “solvency” risk. The current paper, extends this work by deriving optimal funding control procedures for determining the contribution rate for the case of a stochastic model with incomplete state information, making use of the separation principle. The stochastic inputs modelled are the investment returns and the benefit outgo.

scholarly journals Microsimulation of pension reforms: behavioural versus nonbehavioural approach

2009 ◽  
Vol 9 (4) ◽  
pp. 583-607 ◽  
Author(s):  
MARGHERITA BORELLA ◽  
FLAVIA CODA MOSCAROLA
Keyword(s):  
Financial Incentives ◽  
Substantial Reduction ◽  
The Self ◽  
Retirement Age ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Replacement Rate ◽  
Pension Reforms ◽  
Notional Defined Contribution ◽  
The Impact

AbstractWe analyse the impact of various pension regimes, as shaped by recent Italian reforms, on retirement age, adequacy issues, and redistribution. We add to the literature on microsimulation by accounting for individuals' reactions to financial incentives when deciding to retire. We find that shifting from a generous defined benefit (DB) system to an actuarially fair notional defined contribution (NDC) system induces individuals, particularly men, to postpone retirement. Voluntary postponement of retirement would grant employees a replacement rate comparable to that obtained in the pre-reform DB regime, while the self-employed experience a substantial reduction in their replacement rate.

scholarly journals Who wins? Evaluating the impact of UK public sector pension scheme reforms

2016 ◽  
Vol 237 ◽  
pp. R38-R46 ◽  
Author(s):  
Alexander M. Danzer ◽  
Peter Dolton ◽  
Chiara Rosazza Bondibene
Keyword(s):  
Public Sector ◽  
Local Government ◽  
Civil Service ◽  
Pension Scheme ◽  
Defined Benefit ◽  
Level Of Education ◽  
Fire Services ◽  
Pension Schemes ◽  
The Uk ◽  
The Impact

Radical changes have been implemented to pension schemes across the UK public sector from April 2015. This paper simulates how these changes will affect the lifetime pension and how the negotiated pension changes compare across six public sector schemes by level of education. Specifically, we simulate the occupation specific Defined Benefit (DB) pension wealth accumulated for a representative employee over the lifecycle by factoring in the recent changes to pension conditions. We find that less educated workers with low or moderate earnings in the NHS, Local Government and Civil Service schemes are the winners having secured an increase in the value of their pension of between 10–20 per cent. Graduate workers with faster wage growth in the Civil Service, Teachers and Local Government schemes lose between 3 per cent and 5 per cent. This is in sharp contrast with the Police and Fire services who have lost around 40 per cent irrespective of their education.

Ersatzraten in der Gesetzlichen Rentenversicherung / Replacement Rates in the German Statutory Pension System

2015 ◽  
Vol 235 (6) ◽  
pp. 553-583 ◽  
Author(s):  
Sebastian Kluth ◽  
Martin Gasche
Keyword(s):  
Life Cycle ◽  
Marital Status ◽  
Pension System ◽  
Real Income ◽  
Retirement Age ◽  
Replacement Rate ◽  
Work History ◽  
Pension Payments

Summary This paper aims to find an adequate concept to evaluate the replacement rate of the latest retiree generation of 2010. Classic replacement rates fail to provide meaningful conclusions because they can only be calculated for around half the retirees. This paper proposes an alternative figure, the so-called life cycle replacement rate, which relates individuals’ pension payments to the average real income over their whole working history. In sum, work history related characteristics like marital status, income or retirement age strongly influence individuals’ replacement rates. Furthermore, women’s replacement rates particularly benefit from non-contribution based pension entitlements, e.g. for periods of child-raising.

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