Contribution Pension Research Articles

On the Postponement of Increases in State Pension Age through Health Improvement and Active Ageing

The UK population is predicted to grow from 65 m in 2015 to 71 m in 2030 and 75 m in 2040, with the number aged 65-plus rising to 18 m. Successive governments have been reluctant to increase taxes but this looks increasingly unsustainable, if the increasing demand for health and social care is to be met. Increasing state pension age is the customary response for keeping pension contributions and benefits in balance in Pay As You Go (PAYG systems). However, this policy raises concerns about the capability of people to work to ever higher pension ages. Using newly available labour market data on health and disability, the paper finds limits to how far pension age can be increased without necessary health improvements. If improvements were forthcoming, planned pension age rises could be postponed. However, inequalities in healthy life expectancy across the UK are a major barrier to its achievement.

Using Administrative Data to Assess the Risk of Permanent Work Disability: A Cohort Study

Purpose Unmet rehabilitation needs are common. We therefore developed a risk score using administrative data to assess the risk of permanent work disability. Such a score may support the identification of individuals with a high likelihood of receiving a disability pension. Methods Our sample was a random and stratified 1% sample of individuals aged 18–65 years paying pension contributions. From administrative records, we extracted sociodemographic data and data about employment and welfare benefits covering 2010–2012. Our outcome was a pension due to work disability that was requested between January 2013 and December 2017. We developed a comprehensive logistic regression model and used the model estimates to determine the risk score. Results We included 352,140 individuals and counted 6,360 (1.8%) disability pensions during the 5-year follow-up. The area under the receiver operating curve was 0.839 (95% CI 0.834 to 0.844) for the continuous risk score. Using a threshold of ≥ 50 points (20.2% of all individuals), we correctly classified 80.6% of all individuals (sensitivity: 71.5%; specificity: 80.8%). Using ≥ 60 points (9.9% of all individuals), we correctly classified 90.3% (sensitivity: 54.9%; specificity: 91.0%). Individuals with 50 to < 60 points had a five times higher risk of a disability pension compared to individuals with low scores, individuals with ≥ 60 points a 17 times higher risk. Conclusions The risk score offers an opportunity to screen for people with a high risk of permanent work disability.

Managing an Ageing Population: Challenging Oral Epidemiology.

Global population projections indicate that the proportion of older people is increasing and will continue to do so for the foreseeable future. Many countries are already experiencing the challenges of managing an ageing population, including increased pension contributions from workers, rises to national retirement ages, and spiralling healthcare costs. In oral health terms, in addition to simply an ageing population, epidemiological studies have demonstrated significant changes in the oral health of older adults in recent years. As the numbers of edentulous older adults has declined, there has been a significant increase in the number of partially dentate elderly. Changing attitudes, improved access to dental care and more effective preventative programmes have meant that large numbers of patients are now retaining natural teeth into old age. However, as older patients retain natural teeth for longer, the dental profession is charged with controlling chronic dental diseases in an increasingly challenging oral environment.

PENSION FUND ADMINISTRATORS AND FINANCIAL TRANSPARENCY OF RETIREMENT SAVINGS FUNDS IN NIGERIA

This study examined the ‘‘Pension Fund Administrators and Financial Transparency of Retirement Savings Funds in Nigeria: A Study of Selected Pension Funds Administrators in Anambra State. These objectives guided the study to examine whether the introduction of PFAs has a significant effect on the reduction of corruption in the management of pension funds in Nigeria, to determine the considerable level of financial transparency in the administration of retirement savings funds by Pension Funds Administrators in Nigeria and to examine if the Contributory Pension Scheme enables easy access to Pension Saving Funds to the retirees in Nigeria. The researcher adopted the survey research design. The study used Activity Theory as its theoretical framework. And a questionnaire was structured as the instrument for data collection. The research questions were solved using simple percentages, while Z-tests statistical tool to test the hypotheses. This study significantly revealed a level of financial transparency in the administration of retirement savings funds by pension funds administrators in Nigeria. Contributory Pension Scheme enabled easy access to pension savings funds to retirees in Nigeria. Lastly, the introduction of PFAs has a significant effect on reducing corruption in the management of pension funds in Nigeria. We recommend among other things, on the part of the regulator, there is need to address issues like non-remittances of pension contributions by the corporation, the problems that cause non-payment of pension and gratuities to older citizens should also be solved, the regulator (National Pension Commission) should enforce the relevant sanctions of the Pension Reform Acts on defaulting employers to improve on the existing compliance and finally, the government of Nigeria should punish those who steal pensioner’s funds to serve as a deterrent to others.

Gender pension gaps along the distribution: An application to the French case

AbstractIn this article we estimate the relative contributions to the gender pension gap of career duration and income earned at different points along the pension income distribution, as well as the role played by minimum pensions and other partly or wholly non-contributory policies in reducing this gap. Our research covers all retirees in France in 2012 employed in the public or private sector at least once in their lifetimes. We first highlight that at every point in the distribution, the gender pension gap is wider for private-sector retirees than for those in the public sector. This is because public sector careers are less fragmented and because the calculation of the public sector reference wage does not penalize career interruptions so heavily. This relative advantage of women in the public sector is probably an additional factor explaining their over-representation in this sector. Applying the decomposition method proposed by Firpo et al. (2007, 2009), we show that composition differences in the gender pension gap are essentially due to differences in contribution periods and wages, with a smaller effect of career duration in the public sector than in the private. In the first deciles, the gap can be attributed largely to differences in career duration. This effect gradually weakens, and differences in the reference wage become the main explanation. We also show that minimum contributory pensions play an extremely important role in limiting the gender pension gap in the first deciles, essentially in the private sector. Last, we show that in all cases the unexplained share of the pension gap is substantial only at the bottom of the distribution and, to a lesser extent, in the top decile. The unexplained share is generally smaller than the explained one and favours men.

PROSPECTS FOR THE DEVELOPMENT OF FUNDED PENSION PROVISION IN UKRAINE

Purpose. The aim of the article is the analysis of the pension system of Ukraine and directions of its reform, clarification of the role of accumulative pension insurance in the system of social protection of the population, as well as study of the prospects for the introduction of a mandatory accumulative pension system in Ukraine. Methods of research. During the research, special economic literature related to the introduction and use of the funded pension system was developed, various economic methods are used, relevant normative and instructive documents in the field of pension provision, statistical data of the Pension Fund of Ukraine are used. Conducting research, the method of absolute and relative, average values and indicators of a number of dynamics is used in assessing the dynamics of the minimum, average pension, wages; the method of analysis using generalized indicators is applied in characterizing the income and expenditure of the Pension Fund of Ukraine. The legislative documents of the Verkhovna Rada of Ukraine was information base of the research, normative and instructive documents of the Cabinet of Ministers of Ukraine, statistical reporting of the Main Department of the Pension Fund of Ukraine. The relevant results of the study were facilitated by the use of special economic literature on the functioning of the national pension system, its reform and the possibilities of using the accumulative pension provision. Findings. The dynamics of the minimum and average levels of pensions in Ukraine over the past five years is analysed, their ratio to the average wage in Ukraine is determined, and the replacement rate is estimated. Attention is drawn to the need to use the State Budget of Ukraine for the needs of the Pension Fund in the payment of pensions to citizens of retirement age. The need to introduce the second level of the domestic pension system to restore the appropriate level of pension provision in Ukraine has been identified. The conditions and prospects for the introduction of mandatory funded pension insurance are analysed. The main bills concerning the practical use of the second level are described; attention is paid to the use of the main financial institutions that can be used at this level. Originality. The substantiation for the introduction of mandatory funded pension provision, which will increase the income of Ukrainian pensioners, has been further developed. The practical application of the second level of the domestic pension system will contribute to its formation as a holistic mechanism. A strong financial base of funded pension programs can be used for the development of the national economy. Practical value. The obtained results of the study provide a basis for further study of the theoretical foundations and development of practical recommendations for the introduction of mandatory funded pension provision and the development of the domestic pension system. Key words: accumulative pension provision, pension treasury, pension legislation, pension assets, average pension, Pension Fund of Ukraine, pension contributions.

Pension Reform and Its Effect on Government Recurrent Expenditure: Evidence from Nigeria’s Data

The study seeks to find out the impact of pension reform on government recurrent expenditure in Nigeria. The Augmented Dickey Fuller and Phillips-Perron unit root tests conducted showed the variables for the research to be integrated at different orders of I(0) and I(1), necessitating the adoption of Autoregressive Distributive Lag (ARDL) for the analysis. The optimal lag structure was 1 which was determined through the Akaike Information criteria. The null hypothesis of no co-integration was rejected based on the ARDL bound test. The error correction term indicates that the speed of adjustment emanating from any short run disequilibrium in the variables is about twenty-one (21) times in the long run. Granger causality showed unidirectional causality running from recurrent expenditure to national pension fund, bidirectional causality running from recurrent expenditure to government revenue and vice versa and unidirectional causality running from national pension fund to government revenue. Diagnostic test also indicated the model to be appropriate, it has no serial correlation, no heteroskedasticity and the model was properly specified. The study recommends increase participation in the contributory pension scheme among public sector employees, increased awareness campaign on the benefits of the contributory pension especially in states and local government, contributor's confidence should be taken into consideration among other recommendations.

The effectiveness of minimum income benefits in poverty reduction in Spain

One of the greatest peculiarities of the Spanish system of minimum income benefits is its complex organisation. There is a wide variety of specific means‐tested benefits whose management and financing depend on the central government. They are designed to protect different contingencies, providing very different levels of protection. On the other hand, the general risk of poverty is covered by regional governments without any coordination and financing from the central government. In this article, we provide a picture of the possibilities and limits of the current set of welfare benefits, focusing especially on its effectiveness in terms of reducing poverty. Our findings show that most benefits are clearly insufficient to cover the risk of poverty in terms of both incidence and intensity. The results show the need for the redesign of the system to better articulate existing benefits in order to prevent new forms of poverty and to respond to emergency situations.Key Practitioner Message: • The Spanish system of minimum income benefits consists of a varied mosaic of benefits that provide very different levels of protection for individuals or households with similar needs; • The contribution of these benefits to the reduction in poverty in Spain is very modest and significantly lower than that of contributory pensions; • The protection provided by MIBS is also unequal by population categories.

Career breaks, broken pensions? Long-run effects of early and late-career unemployment spells on pension entitlements

AbstractUnemployment periods and other career breaks have long-term scarring effects on future labour market possibilities, permanently affecting workers' retirement income and standard of living as pensioners. Previous literature has focused on the impact of job loss on working careers with little attention to its impact on pension wealth, particularly the extent to which longevity heterogeneity amplifies unemployment scars. This paper investigates the effect of single and multiple unemployment spells on the lifetime pension entitlements of earnings-related contributory pension schemes, considering the timing and duration of breaks, alternative lifecycle labour earnings profiles, scarring and restoration effects on labour market re-entry, the existence of pension credits and pension accruals for periods spent outside the labour market, longevity heterogeneity, and the accumulation and decumulation redistributive features of the pension scheme. Pension entitlements are estimated using a backward-looking simulation approach based on the actual Portuguese public pension system rules and stylized labour market profiles identified in the SHARE Job Episodes Panel data using a sequence analysis. Longevity heterogeneity is modelled using a stochastic mortality model with a frailty model. Our results show that the timing and duration of unemployment periods is critical, that scarring effects amplify pension wealth losses, that minimum pension provisions, pension credits and pension scheme redistributive features can partially mitigate the impact of unemployment periods on future entitlements, and that the presence of positive correlation between lifetime income and longevity career breaks can amplify the asymmetry in the distribution of pension entitlements across income groups.

PROBLEMS OF MANAGEMENT OF THE PROCESS OF FORMATION OF THE FINANCIAL MECHANISM OF NON-STATE SOCIAL INSURANCE IN UKRAINE

In this article, the authors substantiate the need for further reform of the national system of private social insurance in Ukraine through a thorough analysis of its financial mechanism. The purpose of the article is a comprehensive analysis of the financial mechanism of private social insurance in Ukraine, providing conclusions and recommendations for its further improvement. The authors use the following research methods: analysis (in the study of individual components of the financial mechanism), synthesis (in generalizing the results of the study of the formation of the financial mechanism), scientific abstraction (taking into account only certain external and internal factors of the system). The paper uses economic and institutional analysis, as the studied sources are primarily analytical documents, scientific publications and regulations. The authors provide a definition of the financial mechanism of private social insurance. The list of studied objects includes: revenues, expenditures, reserves, financial methods and levers (planning and forecasting, investing, lending, incentives, liability, taxation, transfers) and related support (information, regulatory and organizational) of the financial mechanism of the non-governmental social insurance. A comparative analysis of the relevant elements of the financial mechanism (and activities in general) of organizations that provide services for private social insurance: life insurance companies and private pension funds. The results indicate that increasing the level of social protection of citizens in Ukraine is possible only with a comprehensive improvement of the studied financial mechanism. The conclusion is made about the need for further research on the selected problem, especially - the experience of partner countries. Key words: financial mechanism, methods, levers, non-state social insurance, insurance and pension contributions, wage fund, participant, insurance company, non-state pension fund.

PORTFOLIO INSURANCE STRATEGIES FOR A TARGET ANNUITIZATION FUND

AbstractThe transition from defined benefit to defined contribution (DC) pension schemes has increased the interest in target annuitization funds that aim to fund a minimum level of retirement income. Prior literature has studied the optimal investment strategies for DC funds that provide minimum guarantees, but far less attention has been given to portfolio insurance strategies for DC pension funds focusing on retirement income targets. We evaluate the performance of option-based and constant proportion portfolio insurance strategies for a DC fund that targets a minimum level of inflation-protected annuity income at retirement. We show how the portfolio allocation to an equity fund varies depending on the member’s age upon joining the fund, displaying a downward trend through time for members joining the fund before ages in the mid-30s. We demonstrate how both portfolio insurance strategies provide strong protection against downside equity risk in financing a minimum level of retirement income. The option-based strategy generally leads to higher accumulated savings at retirement, whereas the constant proportion strategy provides better downside risk protection robust to equity market jumps/volatilities.

Portfolio Insurance Strategies for Target Annuitisation Funds

Defined contribution (DC) pension funds: A huge burden of complex decision making on individuals; Lack of integration between accumulation and decumulation phases.Provide sustainable income flows (Blake et al., 2008; Financial System Inquiry, 2014): Finance a desired consumption path; Target annuitisation fund (Impavido et al., 2012); Pension fund managers have no liability.

The implicatons of covid-19 pandemic

Abstract Throughout history, the world has faced various types of pandemics that not only threaten human health, but also greatly affect social and economic aspects. Recently the world is suffering from a pandemic, which is caused by the Covid-19 virus that began in Hubei Province, China. Southeast Asia geographically close to the virus outbreak and as a region consisting of a majority of developing countries, SEA’s economic situation will be greatly affected by the spread of this virus. Throughout the Southeast Asian region, ASEAN helping its members by taken various measures and recommendation to counter the spread of the pandemic. Some efforts to stimulate these goals are carried out by eliminating taxes among ASEAN members, provide subsidies in the form of cash assistance for vulnerable parties, moratoriums on loan payments, pension contributions, and cooperate with external partner to deal with the pandemic. The central bank also reduced interest rates, reduced reserve requirements, and purchased government bond. Using qualitative approach and descriptive method, this article will explain and explore about the economic policy in the Southeast Asian region during the Covid-19 pandemic. Keywords: Pandemic; Economic Policy; ASEAN

Public Workers’ Perception towards Contributory Pension Scheme: Evidence from Lagos State, Nigeria

This study examines the perception of public workers towards contributory pension scheme with specific reference to Lagos State, Nigeria. The descriptive research design was adopted, while the simple random sampling technique was employed to select 398 respondents as the sample size for the study. Data analysis was performed with the aid of mean and chi-square. The result reveals that perception of workers towards contributory pension scheme encourages workers to save towards future, is convenient for them in the event of changing jobs, their benefits at retirement will not be affected in the event their employer becomes insolvent, it empowers contributor to choose who administers his/her retirement benefits account and provides the opportunity of enjoying some modicum of pension on retirement. Furthermore, the result reveals that non-remittance of pension contribution into retirement saving account and non-compliance of the pension reform as amended by the government at all levels, are the major challenges facing the successful implementation of the scheme. The study concludes that the contributory pension scheme looks bleak for the sustainability in Nigeria. Therefore, government at all levels should do the needful to ensure the full implementation of the scheme.

Analysis of The Impact of Pension Scheme of State-Owned Companies of China Railways

&lt;p&gt;The purpose of this study was to investigate the factors influencing supplementary pension contribution among employees of China Railway Group Company Limited. Simple random sampling technique was used. A structured questionnaire with close-ended questions was used to solicit data from 421 respondents. Hierarchical multiple linear regression was employed in the analysis of the data. The findings of the study revealed that certain factors such as tax policy and reward system had influences on employees’ decisions to take additional pension schemes besides the mandatory pension schemes. A comfortable retired life of employees depends on the savings made during the days of active service. The study revealed that tax policy positively influenced supplementary pension contribution among employees. Reward system has been considered in many cases as having a positive effect on employee decisions. The findings of the study revealed that reward system positively and significantly influenced supplementary pension contribution among employees. In addition, both tax policy and reward system had influence on employee lifestyle.&lt;/p&gt;

Real Estate and Alternative Asset Allocations of U.S. Firms' Defined Benefit Pension Plans

This study examines the role of real estate and alternative assets in the investment portfolio of defined benefit (DB) pension plans offered by U.S. firms for the period 2002 to 201'3 These plans provide a unique reflection of the confluence of regulatory, accounting, and economic changes that have recently taken plance. Results indicate a quarter of our sample plans invest in real estate while more than half invest in alternative assets. Logistic and panel data regression analyses generally indicate that pension plan size, contribution levels, and funding status are significant in explaining the likelihood of and the variance in the allocation of plan assets to real estate and alternative investments.

Conceptualizing Contributory Pension Scheme Implementation and Job Commitment of University Lecturers in Nigeria

&lt;p&gt;This paper examined the concept of contributory pension scheme as it relates to lecturers’ job commitment in the university system. It adopted the Social Exchange Theory by George Casper Homans in 1958 and a review of other scholars’ findings on pension scheme implementation. It established a link between the CPS implementation procedures and the indices of university lecturers’ job commitment. The paper recommended among others that it is important for employees to see clearly the reward process at work. Concrete acts must accompany statements of intent since lecturers have expectations for good pension package after many years of service to the university.&lt;/p&gt;

Transitioning to a higher retirement age with exponential and quasi-hyperbolic discounters in mixed economies

Abstract This paper analyses the macroeconomic and welfare effects of a higher retirement age within a dynamic overlapping generations framework, wherein exponential discounting and sophisticated quasi-hyperbolic discounting agents coexist in ‘mixed economies’. The transitional dynamics of economic aggregates depend on the proportion of QHD agents, and the extent to which reducing the social security tax rate mitigates crowding-out effects on savings and enables both lower pension contributions and higher pension benefits. Welfare impacts across agent types and cohorts differ accordingly: QHD agents employ the higher retirement age as a commitment mechanism to mitigate the adverse welfare implications of present-biasedness.

Local Policy Experimentation, Social Learning, and Development of Rural Pension Provision in China

The rural pension system, co-financed by rural residents' contributions and government subsidies, is a remarkable institutional innovation in China. To better understand the establishment and policy design of this system, this article studies the local experimentation of (partly) government-funded new rural pension schemes prior to the national policy guideline issued in 2009. The focus is on the role of social learning as a crucial driving force in this process. Through a process tracing based on in-depth interviews in Daxing of Beijing and Baoji of Shaanxi Province, this article illustrates how local governments struggled to find suitable financing models for rural pensions, and relied primarily on hands-on experimentation and experiences. During the mobilization of participation in the schemes, the repeated and constant interactions between local officials and rural residents promoted a form of mutual learning that contributed to local policy adaptation and rural residents' internalization of the value and basic rules of contributory pension provision. The local experience had a cumulative impact on the ideational reorientation of the central officials regarding the state's financial role in provision. Specifically, the financing model in Baoji created new options that facilitated the reconciliation of a set of different concerns and objectives at the centre, notably fiscal affordability, wide coverage, and modest managerial burden, which, this article argues, was the major reason for the incorporation of this model into the national policy. The article concludes by discussing the implications of the establishment of the rural pension system and its provisions on rural state-society relations in China.

Optimal investment of DC pension plan with two VaR constraints

In this paper, we investigate an optimal investment problem under two value-at-risk (VaR) constraints faced by a defined contribution (DC) pension fund manager. We apply a concavification technique and a Lagrange dual method to solve the problem and derive the closed-form representations of the optimal wealth and portfolio processes in terms of the state price density. Theoretical and numerical results show that the two VaR constraints can significantly impact the distribution of the optimal terminal wealth.