Pension Levels Research Articles

Contributions Burden on Persons Active in Agriculture in Relation to Pension Aspects

The paper focuses on the area of the burden of contributions to state budget with an emphasis on pension insurance contributions of employees and self-employed persons active in the agricultural sector with regard to the amount of their future retirement pension. The comparison shows that self-employed workers in agriculture contribute to state budget about 2.5 times less than employees with comparable net income. As a result, the level of pensions is insufficient, predominantly for entrepreneurs whose pensions only amount to 39 to 45% of their real net income. On the basis of analysis of results from different models, calculations were made of the necessary monthly contributions to the supplementary pension savings plans that would ensure retirement living standards equivalent to 70% of net income earned during working life. The paper also quantifies redistributive effects by studying pension contributions of persons active in agriculture during their working life and pension withdrawals in retirement. The results are compared with those obtained from a group of employees. Contributions of the self-employed are also compared within the V4 countries. In the conclusion of the paper there are some recommendations that might lead to a reduction in the gap in contributions and better living standards for future old-age pensioners.

ПЕНСИОННАЯ РЕФОРМА: ПРЕДВАРИТЕЛЬНЫЕ РЕЗУЛЬТАТЫ И ОЦЕНКА ИХ ВЛИЯНИЯ НА ЭКОНОМИЧЕСКОЕ ПОЛОЖЕНИЕ СТАРШИХ ВОЗРАСТНЫХ ГРУПП НАСЕЛЕНИЯ

The object of the study is the older age groups of the population (55+), their socio-economic status, and employment in the context of the pension age reform ongoing in the Russian Federation. The purpose of the paper is to study world experience, the consequences of the Russian pension reform of 2018, and its impact on the finances of the Pension Fund, the income and employment of pensioners, to substantiate the connection between raising the retirement age and the increasing demographic burden on citizens of working age, with the aging of the population, the increase in average life expectancy, verification of previously made predictions. Based on statistical data, the author made an attempt to assess the motivation of authorities in countries around the world and the Russian Federation for institutional changes in the situation of the older generation, as well as the consequences of raising the retirement age and the transformation of the employment status of this socio-economic group. During the research, methods of correlation and regression analysis of scientific literature, regulations of the ILO and the Government of the Russian Federation, statistical data of the UN, and the Federal State Statistics Service (Rosstat) were used. The results of the paper indicate that the current level of pensions in the country is insufficient and it lags significantly behind the “replacement coefficient” of lost wages recommended by the ILO, taking into account international experience, and also “confirms the inevitability of raising the retirement age in the coming years in the context of demographic changes and economic needs of society. Conclusions are drawn about the importance of constantly monitoring the situation of the population aged 60+ in the labor market, the implementation of previously adopted strategic documents on their social support and increasing the level of their pension provision, as well as the fact that today it is very difficult to predict the demographic and social-economic situation in Russia in the coming years.

No country for old men? Microsimulation effects of activating pensioners on the labour market

Being a pensioner in Croatia carries certain risks of poverty and inequality compared to the rest of the population. Low level of average pension compared to the minimal wage is just one case in point. On the other hand, the labour market shortage is not negligible and there is also a poor track record when it comes to pension system reforms in the last two decades. This paper investigates a possible path of the future pension system reform aimed at increasing household income levels -- focused on the labour market participation of people aged 65+ who are willing and able to solve labour shortages present in the market. The general aim of the paper is to analyze the effects that the establishment of the Pensioners Service Center might have on market income, mean household income by decile groups, poverty and inequality indices. It fills the research gap by conducting the first microsimulation of the pension system reform in Croatia focusing on market income. The hypothetical reform is simulated using the tax--benefit microsimulation model EUROMOD based on EU--SILC 2019 data for Croatia. Results confirm market income as the main cause of income inequality as well as that the second decile is the target group of the proposed intervention. Pensioners have a clear monetary incentive to increase their labour supply, which in return decreases all poverty and inequality indices.

Health among workers retiring after the state pension age: a longitudinal and comparative study

BackgroundIn recent decades, many countries have observed increasing labor force participation beyond the state pension age (SPA). However, there is a lack of research on employment beyond SPA and how it relates to older workers’ health. Moreover, there is a need to better understand how institutional factors affect the relationship between older workers’ employment and health. In this study, we examine simultaneous employment and health trajectories over 11 years in 12 countries from Europe and the Americas, and study how these trajectories differ by welfare state regime and level of old-age pension redistribution.MethodsWe used a harmonized pooled-country dataset of 3699 older workers based on four representative panel surveys: the Survey of Health, Ageing and Retirement in Europe (SHARE), the English Longitudinal Study of Ageing (ELSA), the Health and Retirement Survey (HRS), and the Chilean Social Protection Survey (EPS). We conducted multichannel sequence analysis to estimate the types of simultaneous employment–health trajectories, and multinomial regression analysis to examine the relationship between trajectory types and institutional factors.ResultsWe found that late retirement was equally associated with poor and good health. There is also a higher prevalence of late retirement trajectories in combination with poor health in liberal welfare regimes and in countries with lower levels of old-age pension redistribution.ConclusionOur study indicates that nonliberal welfare regimes and redistributive old-age pension policies may be better suited to protect vulnerable workers while providing those in good health with the opportunity to work beyond the SPA.

Multimorbidity and Sickness Absence/Disability Pension in Patients With Cluster Headache and Matched References: A Swedish Register-Based Study.

Multimorbidity among patients with cluster headache (CH) is considered to be high, but large studies are lacking. The aims were to explore the occurrence of diagnosis-specific multimorbidity among patients with CH and matched references and possible associations of this with their sickness absence and disability pension. We performed a register-based study of patients with CH and matched references, regarding their multimorbidity, sickness absence, and disability pension. Data were obtained from 2 nationwide registers: Statistics Sweden's Longitudinal Integration Database for Health Insurance and Labor Market Studies (LISA) (for sociodemographics in 2009, sickness absence, and disability pension in 2010) and The National Board of Health and Welfare's specialized outpatient and inpatient registers for diagnosis-specific health care in 2001-2010 (for identifying patients with CH and multimorbidity, defined by ICD-10 codes). The prevalence and number of net days of sickness absence and/or disability pension in 2010 were calculated, in general and by multimorbidity. Odds ratios (OR) with 95% confidence intervals (CIs) were calculated for comparison of each diagnostic group with references without the chosen morbidity. We analyzed 3,240 patients with CH, aged 16-64 years, and living in Sweden in 2010 and 16,200 matched references. A higher proportion of patients with CH had multimorbidity (91.9%) than of references (77.6%), OR 3.263 (95% CI 2.861-3.721), both in general and regarding all analyzed diagnostic groups. Differences were particularly high for diagnoses relating to the nervous (CH 51.8% vs references 15.4%), OR 5.922 (95% CI 5.461-6.422), and musculoskeletal (CH 39.0% vs references 23.7%), OR 2.057 (95% CI 1.900-2.227), systems. Multimorbidity rates were overall higher among women in patients with CH (96.4% vs men 89.6%). Patients with CH had a higher mean number of days of sickness absence and disability pension compared with references, 63.15 vs 34.08 days. Moreover, multimorbidity was associated with a higher mean number of such days in patients with CH, 67.25, as compared with references, 40.69 days. The proportions of multimorbidity were high in both patients with CH and references, however, higher in the patients with CH, who also had higher sickness absence and disability pension levels. In particular, CH patients with multimorbidity and of female sex had high sickness absence and disability pension levels.

Drivers of pension growth in the long term

One of the main challenges for the Russian insurance pension system in the long term is to sustain an acceptable ratio of pensions to wages and to prevent the growth of the share of pensioners with unacceptably low pensions. The key challenges and factors affecting the level of pensions have been identified. A set of potential measures for a more acceptable dynamics of pensions, their risks and limitations have been revealed. Forecast calculations for the period up to 2050 on the model of the Russian insurance pension system developed by the authors made it possible to estimate the impact of relevant factors and measures on key pension indicators. It is shown that the implementation of these measures can ensure in 2030—2050: the coefficient of the relative level of pensions (to average wage) of about 40%; the theoretical replacement rate (at 35 years of service and the average wage in Russia) of about 50%; the ratio of the average pension payment to non-working recipients of the old-age insurance pension to the subsistence minimum for pensioners — about 250% in 2030—2035 and 380% by 2050; reducing the share of those whose pension payment is less than the minimum subsistence level, almost by half relative to the inertial scenario — to 6—8%.

Directions for improving the pension indexations mechanism in the context of Russian economy’s transformation

The purpose of this study is to analyse the current mechanism for indexing pensions of Russian pensioners and find directions for its possible development in the context of the structural transformation of the Russian economy. To achieve this goal, a statistical and coefficient analysis of pension level indicators from the Rosstat database was carried out. Based on the results obtained, it was concluded that, all other things being equal, it is not possible to fundamentally improve the level of pension provision and it is necessary to continue to carry out significant reforms of the Russian pension system. Taking into account the new realities in which Russia found itself after February 2022, authors proposed and analysed directions in which it would be possible to further reform the Russian pension system. The proposed directions were classified into four groups: 1) measures of a general economic nature, indirectly affecting the level of pension provision; 2) changing the general parameters of the existing pension system in order to optimize it; 3) the development of a non-governmental pension insurance system to solve the problem of a low replacement rate for high-income groups of pension recipients and 4) a change in the existing mechanism for indexing pensions, which involves more radical changes to fundamentally increase the level of pension provision for Russian pensioners.

Employment at the onset of partial disability retirement and four years later

Abstract Background Increasing the labour market participation of people with a reduced ability to work is a big labour market challenge in many countries. In Finland, one third of all new disability pensions are granted as partial pensions. It is also known that most partial disability pensioners continue working while receiving a pension. There is only limited research about the length of employment of partial disability pensioners and the factors associated with employment in retirement. The aim of this study was to examine the employment at the onset of partial disability retirement and four years after retirement, and to examine how age, gender, educational level, employment sector, diagnosis and type of pension are associated with employment after partial disability retirement. Methods Our Finnish register data comprised 7,617 partial disability pensioners aged 20-58 who retired in 2013 or 2014. Logistic and multinomial logistic regression analysis were used to estimate OR:s and 95 percent CI:s for employment at the onset of partial disability retirement and four years after retirement. Results 81 percent of partial disability pensioners were employed when retiring on a partial disability pension. Four years later, 50 percent were still drawing a partial disability pension, of whom 77 percent were working. 11 percent were employed but no longer drawing a partial disability pension. The partial disability pensioners who were more often employed were younger, female, more highly educated, working in the public sector and receiving a temporary disability pension. Conclusions Many sociodemographic factors are associated with employment at the onset of partial disability retirement and with continued working while drawing a partial disability pension. Key messages

A Funded Pension System with Endogenous Retirement

This study employs an overlapping generations model to analyze the effect of public pension levels on economic variables when the labor supply of the elderly is determined endogenously. This paper focuses on the effects of a funded scheme on the economy as well as a pay-as-you-go (PAYG) scheme. First, the impact of the expansion of public pensions on the capital–labor ratio is analyzed. It is shown that the expansion of a funded pension increases the capital–labor ratio, which is contrasted with the fact that the PAYG pension is neutral to capital–labor ratio. Next, the impact of public pensions’ introduction on steady-state economic welfare is evaluated. The introduction of a PAYG pension will improve economic welfare when the population growth rate is higher than the interest rate, while the introduction of a funded pension will improve economic welfare when the population growth rate is lower than the interest rate.

The Global Pension Index of Slovakia

In every corner of quality of the world, the issue of pension system is being addressed. One of the most important documents that has offered its evaluation is the Mercer consulting firm and the CFA Institute, in cooperation with the Monash Center for Financial Studies. Since Slovakia is not included among the countries that evaluate these companies in their study, this paper offers the calculation of the Global Pension Index for Slovakia in the year 2020. Based on the data obtained and the grade from A to E, Slovakia is one of the countries that are rated by C+ with a total score of 65 points out of 100 as a country with a pension system “that has some good features, but also includes major risks and/or shortcomings that should be addressed. Without these improvements, its efficacy and/or long-term sustainability can be questioned.” The problems that affect the pension index of Slovakia are very low pensions for low-income groups, the level of pension assets as a percentage of GDP at the level of 14.35%, the participation in the labour rate at the level of 4.5% for the age 65 and over, and low real economic growth.

"We are returning...". Issues of pension provision in the elections to the State Duma of the Russian Federation of the VIII convocation.

One of the main directions of the state's social policy is to support the elderly. In the Russian Federation, after the last pension reform of 2018, the issue of pension provision has become one of the main points of tension in the relationship between the state and society, which was reflected in the federal election campaign of 2021. The subject of study in this article is the proposals of political parties in the field of pension policy. The election programs of the parties in the 2021 elections to the State Duma of the Russian Federation of the VIII convocation were used as the object of the study. The author examines the attitude of the authors of pre-election programs to certain aspects of pension reform, including changes in the retirement age, the direction of further reforms, social protection of pensioners and pre-retirees, in addition, a comparison with the position of the parties in 2016 was made. The results of the study are based on the use of general scientific methods and principles of scientific knowledge, a systematic approach, comparative analysis and historical objectivity. Despite the continued significant interest of the population in the pension problem in 2021, which sharply increased after the retirement age was increased, the parties were unable to fully realize the potential of this issue. Speaking from critical positions, they focused on counter-reform, reducing most of the proposals to a return to the past, practically offering no innovations. Most of the statements on raising the level of pensions were clearly populist in nature and had no mechanism for their implementation. Regarding the 2016 elections, opposition parties have noticeably intensified criticism of the existing system and the Pension Fund of Russia. United Russia, on the other hand, distanced itself as much as possible from the pension reform, without touching on the latest changes in its election theses. It can be expected that in the next election cycle, the pension issue will retain the status of one of the central issues in the election campaign.

Understanding Twenty Years of Inequality and Poverty Trends in Russia

The distribution of income in Russia changed significantly over the past 25 years. This paper examines the factors that have been driving the fall in inequality and poverty over two recent decades in the Russian Federation. Changes in earnings from public and private sectors and pensions have been the main sources of changes in the income distribution between 1994 and 2015. Falling inequality and poverty were the result of a decrease in the dispersion of private sector earnings and an increase in the levels of pensions and public sector earnings. Neither the evolution of socio‐demographic characteristics nor the level or structure of employment alone had big impacts.

Old age or dependence: Which social insurance?

AbstractIn recent decades, there has been an increase in life expectancy and a rapid increase of the very senior dependency ratio in developed countries. In this context, we examine the optimal levels of public pensions and public long‐term care (LTC) insurance. According to the most reasonable estimates of correlations among individual incomes, risks of mortality and dependency, we show that it is always desirable for a utilitarian social planner to have a balanced budget increase in LTC benefits at the expense of public pension benefits, until the cost of LTC is fully covered. This is true with or without liquidity constraints. For a Rawlsian planner, the balance between the two schemes depends on a comparison of the ratio of the survival probability to the dependence risk of the poor with its population average.

Pension Security Level of Urban Employees in China Based on CHIPs

In 2019, the Chinese government has put forward comprehensive plan for reducing social insurance premium rate, which will affect the measurement of the pension security level. In order to evaluate the pension level, this paper uses CHIPs data from 1988 to 2018 to calculate “empirical” pension replacement rate by “empirical” method based on different wage calibers. The result shows that the pension replacement rate and income replacement rate of urban employees have gradually declined in the past 30 years. The pension level of nonprivate employees is lower than that of insured employees, and that of insured employees is lower than that of full‐scale employees. The pension level of male, high‐income groups, the older generation, organs, and institutions is much higher than that of female, low‐income groups, the younger generation, and enterprises relatively. Compared with other countries, the pension replacement rate of urban employees in China is not low, but the income replacement rate is relatively low. This paper makes an in‐depth analysis of the actual pension level under the new policy. As a result, it is necessary to vigorously develop multilevel and multipillar pension system such as enterprise annuity, occupational annuity, and commercial pension insurance, so as to improve the pension level of urban employees.

STATE PENSION INSURANCE IN UKRAINE: MODERN CHALLENGES AND DIRECTIONS OF REFORM

Introduction. Reforming the pension system in Ukraine is associated with the need to introduce a second funded level of pension insurance in the face of a steady deficit of the Pension Fund, the presence of significant shortcomings in the mechanism for calculating pension payments that do not depend on the volume of contributions paid for compulsory state pension insurance of the level of pensions, the level of which in the conditions the constant rise in prices for essential goods and services causes the impoverishment of the population. The purpose of the article is to conduct a comprehensive analysis of the domestic practice of generating budget revenues for the Pension Fund of Ukraine and spending in the context of permanent changes in the country, identify the main trends and challenges and determine the main directions for reforming the pension system of Ukraine. Results. An analysis was made of the domestic practice of generating budget revenues for the Pension Fund of Ukraine in the context of a reduction in incomes of the population due to quarantine measures due to the spread of COVID-19, job losses, crisis phenomena in the country's economy, as well as additional items of expenditure of the Pension Fund budget aimed at material support of citizens retirement age. The shortcomings of the current practice of functioning of the solidary system of pension insurance are identified. Conclusions. Substantiated proposals for the effective implementation of the second funded level of the pension insurance system in Ukraine. It has been determined that the combination of a solidary and funded pension insurance system in today's conditions is the best option, since it will diversify various types of risks and provide basic types of pensions.

Региональная дифференциация возраста выхода с рынка труда в России

Actual retirement age is one of the most important characteristics of older people employment and retirement behaviour. Since the mid-1990s, the effective retirement age has been used to estimate the age of exit from the labour market of older workers. In the context of significant socio-economic differentiation of Russian regions, this parameter should be assessed not only at the national, but also at the regional level. The article presents estimates of the age of exit from the labour market (effective retirement age) in Russian regions for 2010-2019, as well as identifies the factors determining its interregional differentiation. For the first time, the effective retirement age and its determining factors were assessed using Russian data. In particular, Labour Force Survey and regional statistics were analysed. To calculate the effective retirement age, both static and dynamic approaches were applied; econometric modelling was used to identify its determinants. The study revealed that in 2019 the age of exit from the labour market was 62.4 years for men and 60.2 years for women. The effective retirement age for Russian men and women is higher than the normal retirement age in the country, but is lower than the average of most OECD countries. For the period 2010-2019, the age of exit from the labour market remained practically unchanged for men, while it slightly increased for women (by 0.7 years). The age of exit from the labour market is characterised by a fairly significant and stable regional differentiation. The determinants of the effective retirement age are the northern status of a region, the relative level of pensions in the region (the ratio of the average pension to the average wage), the share of employees with higher education. The research results can be used to develop measures to increase the older people employment. Changes in the age of exit from the labour market caused by the pension reform require a further study.

Maximizing with‐profit pensions without guarantees

AbstractPension providers are currently running into trouble mainly due to the ultra‐low interest rates and the guarantees associated to some pension benefits. In this paper, we aim to reduce the pension volatility and provide adequate pension levels—with no guarantees—through a new pension design. Under this design, the individual's premium is split into an individual and a collective account, both invested in funds. When the return from the individual fund exceeds a predefined corridor, a certain number of units is transferred to or from the collective account. In this way, the volatility of the individual fund is smoothed. By controlling the corridor width, we maximize the total accumulated capital at retirement.

Унормування впровадження накопичувального рівня пенсійної системи України

According to the current legislation, the modern Ukrainian pension system is not yet fully formed. In Ukraine, PFC contributions currently form a source of pension benefits for citizens. The solidarity pension system is crumbling . That is, as in the rest of the world, the nation is aging, the share of retirees is growing, and there is less able-bodied population. The search for new ways to save for old age is in the direction of creating a mandatory accumulation under the supervision of the state. Thus, today, a second level of the pension system, mandatory accumulative component, and a rather underdeveloped and unpopular non-state pension system, which forms the third level of the national pension system, do not function. However, in 2020, the work on the concept and bill on the mandatory savings system was intensified. Its introduction is seen as a tool that can increase both the level of pensions and their differentiation. But the world experience of such reforms shows that the real effect on payments from the savings system will have to wait at least 15-20 or even 25 years. The article examines the issue of introducing a funded pension level at the legislative level. According to the results of an expanded analysis of 19 draft laws on reforming the current pension legislation and proposals for new laws on these issues in the period from 2018 to 2021, we can conclude that there is no single concept of amending legislation, so most bills are either withdrawn or sent for further refinement. Currently, various aspects of the pension system of Ukraine are regulated by a large number of legislative acts, so there are signs of dispersion in these draft legislative changes. Most of the bills are developed to enhance the welfare of certain categories of citizens, including servicemen, single mothers, victims of the Chernobyl accident, war veterans and more. The issues of the accumulative pension system are mainly raised in the bills of 2020–2021.

Financial Literacy Self-Evaluation of Young People in Latvia

Regular and proportionate voluntary savings in private pension funds can become an important part of oldage pensions. However, this can happen if the savings are made for a long period of time. This justifies the target group of the 3rd pension level, which are young people who have started to receive a regular income from their professional activity. One of the most discussed issues in promoting voluntary pension savings is the level of financial literacy. In addition to other motivating factors, such as financial incentives, the level of knowledge of the population about the opportunities to participate in the third pillar of pensions makes them want to build up voluntary savings. Effective communication of information to a precise target audience is one of the main tasks of government agencies in formulating pension policy. In order to assess the impact of various socio-economic factors on young people's knowledge of savings for pension formation, a survey of Latvian youth was conducted in February-March 2021, addressing youth organizations and universities. The survey is designed using closed and semi-closed questions, in several questions respondents were asked to provide ratings using the Likert scale. The survey provides answers to the question about the level of knowledge of Latvian youth about the current pension system, emphasizing the investor's right to handle investments in private pension funds, as well as the basic conditions for creating savings at the 2nd and 3rd pension levels. The task of the study was to analyze the respondents' financial literacy self-evaluation answers based on the main socio-economic factors - gender, age and income. The results of the study confirm that the level of financial literacy of young people differs according to age, gender and income level.

STATE ECONOMIC POLICY AS A TOOL FOR IMPROVING THE SOCIAL WELFARE SYSTEM

Introduction. The economic development of any society is determined by its needs, so when analyzing long-term changes in the economic system, attention is focused on the parameters of social welfare. People's perception of the level of their well-being is historically determined and depends on the prevailing criteria for assessing human well-being at a particular time and place. In modern Ukraine, the level and standards of living of the population does not meet world standards of living, the level of real incomes of many citizens is extremely low, economic and social differentiation between rich and poor is extremely high. In this regard, improving public welfare is the central task of the state in the formation and implementation of economic policy. The purpose of the article is to study the state economic policy as a tool to improve the social welfare system. Results. Models of state influence on public welfare are considered: liberal, neoclassical, neo-Keynesian ("welfare state", social market economy). The study of models of state influence on public welfare allowed to determine the directions of state intervention: external effects, production of public goods, influence on asymmetric information, leveling of cyclical fluctuations, policy of support and growth of incomes, protection of competition. The legal framework for the formation of social standards in our country is not developed. The priority tasks of the state in the fight against poverty have been identified. Recommendations for further development of social partnership are given. Conclusions. The state takes a number of measures aimed at ensuring the growth of social and individual well-being at both the national and regional levels. At the same time, the measures taken are often ineffective due to the lack of the main basis in the mechanism of improving welfare - the goal of meeting the specific needs of the individual and society. It is based on needs that the minimum wage, the level of pensions and scholarships and other social standards should be determined. Collective and social needs must be taken into account in the distribution of both corporate profits and state budget revenues. The focus of public policy to meet needs will increase its effectiveness. Key words: social welfare, poverty, state economic policy, social policy.