Cross‐country differences in the long‐run economic impacts of increased fertility

This chapter presents and compares results from two studies that analyse the same research questions with different data sets. The first study analyses data on productivity at the level of work teams in one single plant. The tasks in this plant are rather homogeneous and age-productivity profiles can be estimated fairly precisely. But the results cannot be generalized to other parts of the economy. The other study analyses the Finnish Linked Employer Employee Data (FLEED), which provide information on productivity at the plant level for the Finnish economy. At this aggregate level, age-productivity profiles are obviously cruder. On the other hand, the results apply to a large part of the entire Finnish economy and can easily be generalized to other developed economies. The linked data also make it possible to compare productivity and wage profiles by age.

Introduction. In order to further move towards the European Economic Area, Ukraine needs to take pension reform measures. Pension provision in Ukraine has to be profoundly reformed in terms of regulatory and legislative framework for calculating pensions in Ukraine. What is of particular importance is improving Ukraine’s laws and methods for calculation and pension payments to citizens. Another important focus of the reform agenda is to define categories of people eligible for old-age pensions, disability pensions, and long- service pensions.Purpose. The purpose of the article is to interpret the regulatory and legislative framework for calculating pensions in Ukraine; to describe changes in pension payments before and after the reform was implemented; to highlight ways of improving pension payments in terms of regulations and legislation.Methods. The research methods used in the article include: analysis; comparison; historical method to consider the legislative framework for calculating pensions at different periods of time.Results. The regulatory and legal framework for calculating pensions in Ukraine is a complex system comprising the Constitution of Ukraine, the Laws of Ukraine, the Labour Code of Ukraine, decrees, Presidential decrees, International agreements and laws of the USSR. Some of these regulations and legislation need to be revised and amended in order to bring them in line with contemporary practices and modern standards.It is claimed that since 2017, Ukraine’s government has been implementing the pension reform aimed at relieving the pressure on the working-age population and improving living standards for retired people. In particular, the retirement age has been raised, eligibility criteria for preferential pensions have been revised, and methods for calculating pensions have been changed.The Ministry of Social Policy of Ukraine argues that the new pension reform is expected to enhance social, labour and post-retirement relations, to increase tax revenues through reporting real salaries, to develop a framework of social justice when calculating pensions. The author points out that the regulatory and legislative framework for calculating pensions is outdated at this stage and it requires changes. The considered changes are as follows: the establishment of a working group for entitlement of preferential pensions; the introduction of wage differentials by industries and occupations; the increase of pensions in line with inflation and age; the implementation of notional defined contribution pension system; the introduction of the new Labour Code and Pension Code, which are expected to regulate labour and post-retirement relations and meet modern standards.It is also indicated that continued employment should be enforced by legislation and a system of granting advantages and social security benefits to those who retire later needs to be developed.In terms of legislation, sufficient regard should be given to non-state pension schemes, defined contribution pension systems, and the principle of fairness when it comes to pension entitlements. It is also crucial to adjust pension amounts and retirement age to align with the sustainability ratio and the average life expectancy.Discussion. Further research of regulatory and legal framework for calculating pensions in Ukraine should be focused on the development of the Pension Code and improvement of the existing laws relative to pension calculation and payment. The author also suggests differentiating minimum wages by industries and regions and countering the illicit labour market and campaigning against payments ‘in envelope’, because official wages are the basis for calculating pensions.

A major consequence of the persisting low birth rates and still-rising longevity experienced in many European and some Asian countries is an aging workforce. How serious a concern should this be for the course of economic growth? In particular, what effect does it have on labor productivity, as measured by output per worker? And what does the experience thus far in adapting to an older workforce suggest for future labor market and human capital policies in a fast-aging world? Economic theory provides no simple answers to these questions. Older workers tend to be more experienced and perhaps more competent managers; younger workers may be better educated, healthier, and more energetic and intellectually agile. Labor market institutions and practices may promote or impede substitutability among workers of differing ages. Indirect demographic effects on productivity also exist, working through capital and product markets, schooling quality, and the pace of innovation. Age-productivity profiles at the level of the individual, firm, and country can be markedly different. The contributions to this volume help define the state of this difficult but important area of economic demography. The studies included cover the broad economic significance of global population aging; historical evidence of the effects of human capital accumulation; age variation in production and consumption; methods of population projection by educational attainment; sensitivity analysis of productivity projections with respect to modeling assumptions such as inter-age substitutability and form of production function; and country case studies of age-productivity relationships (Austria, Japan, Sweden). Empirical materials drawn on range from the individual to the macro-economy.

The world is experiencing population ageing, which will extend to the future across the world. The ageing population is sure to impact a country’s welfare policy and economy. Macau is a special administrative region (SAR) of China with a long-life expectancy and a decreasing reproduction rate, making the population ageing particularly obvious. This study adopts a mixed methods approach to analyze the relationship between the ageing population, pension recipients, and pension payments to suggest the pension system and welfare leaking strategies of Macau SAR. The Granger causality test and focus group were conducted to test and discuss the ageing population, pension recipients, and pension payments. Results show that the ageing population positively affects pension payments. The ageing recipients are not corresponding to the ageing population and payments show welfare leakage. Suggestions are offered accordingly for a welfare policy to offer remedy strategies and reform the pension system.

The Defined Benefit (DB) pension system operates under a Pay-As-You-Go (PAYG) framework, providing guaranteed post-retirement income and family pension benefits to Government Employees worldwide. However, rising pension liabilities, demographic shifts, and limited fiscal space have rendered the system financially unsustainable. Pakistan is not out of this problem, and Higher Education Institutions (HEIs) are particularly affected, as an increasing proportion of their recurrent grants is diverted toward pension obligations, constraining academic and developmental activities. While global pension reforms are well documented, the perspectives of operational pension administrators within Pakistan's HEIs remain largely unexplored. This study investigates sustainable reforms to optimise the DB pension payment system in HEIs. A qualitative multiple-case study design was used, including in-depth interviews with directors of finance, pension officers, auditors, and members of the HEC Board of Governors (BoG), supported by an extensive literature review. Using thematic analysis, both pre-empirical (literature-driven) and post-empirical (field-driven) frameworks were developed, identifying 25 additional mechanisms for controlling pension payments. The study proposes a comprehensive, evidence-based framework to assist policymakers, HEIs, and governing authorities in strengthening the financial sustainability of the DB pension system while ensuring the welfare of current and future employees.

The value of retirees' gratuity and pension will continue to grow as individuals reduce their reliance on family members to care for them in old age and accept the truth that they must care for themselves by saving for the future. Benefits for retirees have piqued the interest of policymakers and experts worldwide. Numerous articles have been written to assess Nigeria's previous pension system, the reasons for its failure, the shortcomings of the new pension system, and the influence of both the old and new pension systems on pensioners' wellbeing in Nigeria. Nonetheless, no study exists in Nigeria on the effect of delayed gratuity and pension payments on post-retirement situations. To close this divide, this study explores the effect of delayed gratuity and pension payments on retirees' willingness to keep their current position in Nigeria. This study analyzed secondary data obtained from published and unpublished books, journal articles, and online sources. It used content analysis to determine the relevance of the material collected to the study's scope. The study shows that delayed gratuity and pension payments contribute to pensioners' diminishing status, deteriorating health, and premature mortality shortly after retirement. The study consequently suggests that both public and private employers of labor do regular pre-retirement training for their employees to avoid the shame of seeing their retirees become penniless on the streets or succumb to an early death shortly after retirement.

The current financial and economic crisis has highlighted the importance of investment risk for pension systems. In particular, the dramatic spread of defined-contribution pension provision around the world means that investment risk has a direct effect on living standards in old age. This paper explores how uncertainty over investment returns affects individuals’ retirement incomes and government budgets. The key finding is that public pensions, old-age safety net benefits and the tax system act as “automatic stabilisers” of retirement incomes in the face of investment risk in defined-contribution pension plans. However, the degree of protection offered by these policies, and therefore the exposure of individuals’ retirement incomes to investment risk, varies significantly between countries. The paper uses the OECD pension models to explore the implications of a range of possible outcomes for investment returns. (The distribution of investment returns used is derived from historical data in D’Addio, Seisdedos and Whitehouse, 2009.) The analysis begins with the individual pension-scheme member. The results demonstrate that the overall design of the retirement-income package must be taken into account when assessing exposure of individual incomes in old age to investment performance. Many elements of pension systems are not subject to investment risk. And resource-tested benefits can act to mitigate investment risk by paying a larger benefit when returns are poor. Analysis of net pensions shows how taxes can also act to offset the effect of investment risk on living standards in retirement. The differences between countries in the extent to which these different factors affect exposure to investment risk are huge. Together, taxes and meanstested benefits can be termed “automatic stabilisers” for retirement incomes in the face of investment risk. Secondly, the paper uses the OECD pension models to look at the impact of investment risk on the public finances. The corollary of the reduction in investment risk for individuals through tax and transfer policies is exposure to investment risk of the public finances. In countries with resource-tested benefits, the government has a “contingent liability” that depends on investment returns. Better performance means lower expenditure on safety-net benefits. Similarly, the tax system means that the government is effectively a “co-investor”, with the individual retiree, in the defined-contribution plan. Higher returns mean more tax revenues. This effect is particularly large where the tax burden on pensions in payment is high. Adding these two effects together, governments (and so taxpayers) are in many countries significantly exposed to investment risk. This demonstrates how it is impossible to make risks go away: it is only possible to reallocate the risk between different actors in the pension system.

The military pension is often only a part of the institution of special payments to military personnel. Due to the fact that pension provision for military personnel is a specific system and differs from general pension payments, it is necessary to understand it. This article analyzes the features of the modern pension system for military personnel of all law enforcement agencies of the Russian Federation, reflecting, on the one hand, the global trends and, on the other hand, the specifics of the Russian military pension system. The total expenditures of the federal budget (for the period 2016–2021) for the pension provision of persons who served in the military in the power structures of the state are presented. The dynamics of the total budget expenditure for a particular power structure in relation to pension payments is studied (using the example of the Ministry of Defense of the Russian Federation). The average size of pensions for seniority of pensioners of the Ministry of Defense of Russia is considered. The analysis of the growth rate of monetary allowances for military personnel, military superannuation pensions, old-age insurance pensions and the inflation rate from 2018 to 2022 was carried out. Special attention is paid to the budget allocation related to pension provision for military personnel of the Ministry of Defense of the Russian Federation and the Ministry of Internal Affairs of the Russian Federation. A comparative analysis of the dynamics of indexation of military pensions and old-age insurance pensions for the period 2013–2022 was carried out. The specifics of pension payments to military personnel, depending on the power structure of the Russian Federation, are considered. The characteristic features of calculation, payment, recalculation and assignment of pension allowance payments are presented, showing the specifics of the mechanism of formation of military pensions.

Upgrading economic relations in the pension system to raise the living standards of Russian citizens remains a relevant problem for present-day Russia. In order to raise living standards of pensioner citizens, the Russian Federation adopted a federal law in 2018: No 350-FZ “On amendment of several legal acts of the Russian Federation for the purposes of assignment and payment of pensions”. It included a 10-year pension reform providing both for a raise of the retirement age and for a gradual transition to a new two-level pension system: state and voluntary. The main reason for the reform is the shortage of resources in the Pension Fund of the Russian Federation. Using a systemic methodological approach and methods of statistical and economic analysis, including horizontal and vertical analysis, the authors assessed the dynamics and structure of income and expenses of the Pension Fund and the number of employed pensioners in Russia. Pensions to individuals were calculated using methods of ratio analysis. Differences in living standards of pensioners in the Far North and other regions of Russia were assessed using comparative analysis. The study showed the reason why Russian pensioners stay employed, presented the procedure of pension payments to individuals, and explained potential ways of improving the pension system. The main idea of the study findings is to explain the need to reform the pension system for the purpose of raising the living standards of pensioner citizens of the Russian Federation.

The solidarity pension system currently plays a major role in the functioning of the pension system of Ukraine. It is the first level of the domestic pension system that accounts for the main financial burden of pension payments to Ukrainian citizens. The aim of the scientific article is to assess the financial potential of the solidarity pension system of Ukraine, determine the impact of various factors on its condition and search for additional sources of financing pension payments for citizens of retirement age. The article pays special attention to the analysis of the challenges that society has received under martial law in the country, and their impact on the features of the financial provision of the pension sector. The results of the study show that the crisis in the national economy, as well as negative trends in the demographic sphere, significantly affected the financial condition of the main financial institution of the solidarity pension system – the Pension Fund of Ukraine (PFU). During the study period, the Pension Fund’s own financial resources are not enough to fulfill its obligations to Ukrainian pensioners, so there is a deficit of the PFU. It is determined that it is covered by the State Budget of Ukraine, as well as financial resources of international financial organizations. Attention is drawn to the fact that the minimum and average pensions of Ukrainian pensioners, although they tend to increase, are much lower than the incomes of citizens of retirement age in most European countries. In order to promote the diversification of sources of income for citizens of retirement age, to raise their level to European standards, it is necessary to introduce a mandatory accumulative pension system. It is noted that accumulative pension programs together with redistributive ones will contribute to strengthening the financial potential of the pension sector and increasing the incomes of Ukrainian pensioners.

Pension systems are complex and diverse, so comparing them is consequently difficult. Yet there are valuable lessons to be learned from the pension experiences of other nations. International comparisons of pension systems have focused almost wholly on the fiscal aspects of ageing populations. This paper provides consistent data on pension entitlements for the 30 member countries of the OECD, allowing cross-country analysis of the adequacy and distribution of pension promises.The following section provides a brief description of the 30 retirement-income regimes and compares key parameters, such as pension eligibility ages, ceilings on pensionable earnings, contribution rates to defined-contribution schemes and accrual rates for defined-benefit plans. Section 2 sets out the methodology for and assumptions used in modelling pension entitlements. Section 3 presents replacement rates, the most commonly used indicator in pension analysis. Section 4 calculates pension wealth, the present value of the flow of pension entitlements, which captures the effects of cross-country differences in life expectancy, pension eligibility ages, and indexation of pensions in payment. The concept of weighted averages is introduced in Section 5: a way of summarizing the main indicators across the range of individual earnings. The structure of the pension package, that is the role that different components of the retirement-income system play, is explored in Section 6. Section 7 presents a measure of the progressivity of the pension benefit formula, while Section 8 concludes.

The article carries out a comprehensive study of the institutional support for the functioning of the financial and economic mechanism of pension provision for citizens in Ukraine. Pension provision is one of the most important components of the social protection system of the population, which directly affects the quality of life of a significant part of citizens. In the context of transformational changes, demographic aging of the population and financial instability, the need for a deep analysis of the institutional support for the functioning of the financial and economic mechanism of the pension system of Ukraine is becoming more urgent. It is the institutional aspect that is decisive in the formation of an effective, sustainable and fair model of pension provision that can meet modern challenges and ensure social stability. The focus is on the role of the institutional component in the formation and implementation of an effective pension system, emphasizing the relationship between institutional changes, economic conditions and social consequences of reforms. The purpose of the article is to analyze and characterize the main institutions that ensure the functioning of the financial and economic mechanism of pension provision for citizens in Ukraine and to identify ways to improve their activities. The use of various economic methods contributed to the characterization of the main institutions of the pension system of Ukraine, determining their role in the functioning of the financial and economic mechanism of pension provision for citizens. In the process of analysis, the main subjects of institutional provision were characterized - state bodies, the Pension Fund of Ukraine, non-state pension funds, financial and credit institutions involved in the management of pension resources. The current regulatory legal acts regulating the pension system were analyzed. The key role of the Pension Fund of Ukraine in managing the solidarity pension system was noted. It was determined that in the future development of its information structure, the strategic guideline is the formation of an intellectualized system of automated assignment, adjustment and payment of pensions. The importance of introducing electronic work books as one of the key factors in the modernization of the system of personalized accounting of insurance pension contributions is noted.

Changing established systems of government entitlement is a thorny proposition, even for popular states with sturdy holds on the reigns of power. The Russian Federation, in the throes of a severe economic downturn, extreme political instability and social crisis, has nonetheless altered the official stance toward forms of entitlement from the previous regime. Benefits cut from the ‘social contract’ have included guaranteed employment, free post-secondary education and access to state-subsidized apartments, in attempts to redefine the lines of authority and responsibility between citizens and the state. Other lines of responsibility appear sacrosanct. The Soviet pension system, more specifically the old age and service pensions, remains in place, but with extreme delays in payment, poor indexing to the cost of living and high levels of tax evasion.In this article I examine the ways in which both the legacy of Soviet pension policies and post-1991 economic and social trends have constrained policy options concerning pension reform, particularly in reference to old age pensions, and prevented a serious re-evaluation of pension provision. The Russian Federation government inherited a pension system ill-equipped to cope with its aging population. However, the previous pension system did deliver payments on a regular basis to nearly one in five citizens before 1991. Unlike other areas of often unfulfillable social services guarantees (housing for families, quality health care and free access to higher education), the pension system represented a Soviet social programme that provided consistent direct assistance to a large proportion of the population. Pension payments were an expected entitlement.

In pay-as-you go pension systems, automatic balancing mechanisms (ABMs) are designed to face adverse demographic and economic changes. In this respect, ABMs can be defined as a set of pre-determined measures established by law to be applied immediately as required according to an indicator that reflects the financial health of the system. The purpose of ABMs is, through successive application, to restore the sustainability of the pay-as-you-go pension system. First, adjustments can be made in benefit levels to reflect changes in life expectancy; second, adjustments can be made through the revaluation of the contribution basis of earlier years; and third, adjustments may occur through the revaluation of pensions in payment. Countries such as Finland, Portugal, Germany, Sweden and Japan, amongst others, have already legislated and included different types of mechanisms into their pension systems. This chapter aims to explore the different mechanisms that have been recently set up and analyse their effectiveness in terms of financial sustainability and adequacy of benefits.

Ageing increases the income of a carbon tax ceteris paribus since energy consumption rises with age, as macro and micro data show. Ageing also increases some public expenditures, notably those of pay-as-you-go (PAYG) pension systems. Accordingly, there may be a case for recycling a carbon tax in an ageing context so as to finance ageing-related public expenditures. This article studies the interacting effects on intergenerational equity and growth of such a recycling. It relies on a general equilibrium model with overlapping generations parameterised with empirical data. Several results emerge. Implementing a carbon tax fully recycled through higher lump-sum pensions weighs relatively more on the intertemporal welfare of young and future generations. A carbon tax fully recycled through lower social contributions financing the PAYG bolsters the wellbeing of young and future generations but weighs on the welfare of baby-boomers and older cohorts. The redistributive effects of recycling a carbon tax can depend significantly on the way used to balance the PAYG regime.