National Pension System Research Articles

IMPACT OF GOVERNMENT REGULATION OF PRIVATE PENSION FUNDS DEVELOPMENT IN UKRAINE

Introduction. The development of an effective pension system is one of the cornerstones of forming a socio-economic model of state development for any country. The mechanisms of formation and use of financial resources of the pension system affect all aspects of the functioning of such model. Assignment of tasks of the organization of future provision of pensions only on some one of the parties of this process (state, employer, individual) is historically demonstrated the vulnerability of such “single-level” models. Accordingly, most countries in the world are developing multi-level models of national pension systems to create various organizational forms of retirement provision, to attract as many participants as possible, and to provide the financial resources needed to secure future retirees. The introduction of a multi-level pension system in Ukraine is still continues. Therefore, the study of problems of state regulation of the functioning of new forms of pension provision for the national pension system and the prospects for their development remains relevant. Purpose of the research is to investigate the problematic aspects of the activity of non-state pension funds as a component of the multi-level pension system of Ukraine and determine the prospects for their development, taking into account the influence of the state. Results. The place of the non-state pension funds in the multilevel pension system of Ukraine is defined. Influence and interdependence of activity of NSPF and other elements of an accumulative component of the national pension system is reasonable. Negative aspects of influence of the state on functioning of non-state level of the pension system in general and NSPF in particular and also consequences for development of activity of NSPF slowing down of development by public authorities of the accumulative making pension system of Ukraine are revealed. Conclusions and recommendations on stimulation of structural reform of the national pension system and development of activity in it the non-state pension funds are formulated. Conclusions. During of pension reform in Ukraine the state focuses attention on reforming of a solidary component of the pension system which covers a considerable part of electorate (pensioners) and slows down introduction of mandatory funded pension system as it will not have fast influence on the electorate presented by the working citizens. Development of nonstate level of the pension system in the context of social and economic development by the government is practically not considered and restrains by subjective factors: a voluntary nature, low level of awareness and trust of citizens and the enterprises concerning activity of the nonstate pension funds and also purposeful (or spontaneous) actions / inaction of public authorities which complicate operating conditions of institutions of non-state pension provision. Objective factors that hamper the development of non-state pension provision are the problems of the national economy, caused by the global and national economic crises (high level of shadowing of the economy and wages, outstripping growth of the share of current consumption in monetary incomes of the population, inflation and currency devaluation, reduce the possibility of the diversification of domestic investments and insufficient accumulated pension assets in foreign currency equivalent for effective foreign investment, etc.). Necessary condition of effective influence of state regulation on development of the national pension system is observance of the legislation by public authorities and appropriate performance of the tasks assigned to these bodies, prevention of emergence of legal collisions between rules of various acts of the legislation, full economic grounding of regulatory measures. The leverage of the development of non-state pension funds may be the introduction of a mandatory accumulation level of the pension system with the involvement of non-state pension funds in the maintenance of mandatory retirement savings. It can stimulate additional voluntary pension savings, a legalization of wages of the working citizens, increase in sources of provision of pensions of the citizens and increase in level replacement of labor income in an old age and also formation of a powerful source of investment resources for financing of national economic development.

The study on the improvement of the Dependents’ Pension of the National Pension System

The study on the improvement of the Dependents’ Pension of the National Pension System

Pension Policy Dimension to Ghanaian Workers’ Housing Needs Provision

The paper explores workers’ housing needs, expectations and pension policy compatibility to meeting this need using the pension system as a mortgage facility. Use was made of a cross-sectional design. A sample of 131 workers was selected through convenient sampling. The findings show that workers have need for houses with retirement in focus and that they expect government to provide them with affordable houses. Government’s provision of these housing needs can purportedly be met via the national pension system’s mortgage facility. Significantly, house acquisition situated within the context of retirement preparation is indicative of retirement portfolio diversification. The findings have implications for promoting housing provision for all workers.

RETIREMENT BENEFIT SCHEME IN UKRAINE: CURRENT REALITIES AND EUROPEAN EXPERIENCE

The subject of the study is theoretical and methodological principles of theretirement benefit scheme formation in Ukraine in the context of eurointegrationtransformations.The purpose of the study is to provide a theoretical substantiation of the essence of Ukraineretirement benefit scheme in the context of European integration transformation, studying theEuropean countries experience in reforming the retirement benefit scheme and the possibilitiesof its application.Research methods. The study uses a set of scientific methods and approaches, includinglogical generalization, systemic, method of comparisons, graphical, which allowed to ensure theconceptual unity of research.Results of work. The article deals with the actual approaches to the «retirement benefitscheme» concept definition, substantiates its essence, defines the methods of social protectionand features of the construction of the national pension system in European countries. Theproblems and perspectives of development of the modern pension system of Ukraine as animportant component of the population social security are researched. The attention is focusedon the problems of reducing the payment of pension contributions, raising the retirement age anddeveloping non-state pension funds.The field of results application. In the field of economics and in the practical activities ofthe structural units of the Pension Fund of Ukraine.Conclusions. The main results of the study and its theoretical and methodological resultscan be reduced to the following wording: the retirement benefit scheme in each country is animportant component of social protection of the population, and the effectiveness of this systemdepends on the welfare of the population and the level of stability in society; the pension systemof Ukraine does not meet the requirements of the present due to complicated problems, whichare caused to some extent by the shortcomings of the existing retirement benefit scheme, theimperfection of the mechanism of its financing. Further study of the European countriesexperience and successful constructive solutions will be useful for their application in theprocess of building and reforming our own pension system, which will avoid negativetendencies, caused by socio-economic realities of modern society.

LIFE INSURANCE UNDER REFORMING THE PENSION INSURANCE SYSTEM

The purpose of the paper is to generate practical recommendations on the prospects of life insurance development under reforming the pension insurance system in Ukraine. Methodology. In the article, a considerable attention is paid to international experience, the implementation of which is relevant for Ukraine today. In determining the place of life insurance in European pension systems, the experience of Spain and the United Kingdom is considered, which is sufficiently indicative for Ukraine and can serve as a model for reforming the national pension system. Methodological basis of the article are methods of scientific cognition, which enable to expose basic conformities to the law of development of the pension systems in this countries and place of life insurance in them. Such methods are in particular used as: analysis and synthesis – during the study of reforming pension systems, their detailed analysis and definition of their peculiarities; scientific abstraction – with the purpose of forming of theoretical generalizations and conclusions; also, the method of scientific synthesis, forecasting method, econometric modelling for forecasting the development of life insurance in Ukraine up to 2020. Results. The pension insurance system of Ukraine is at the stage of reformation by introducing compulsory accumulation of pension funds and the development of voluntary non-state pension insurance. The main financial intermediaries providing voluntary pension accumulation services in Ukraine are: banks – through the possibility of saving on retirement deposits, insurance companies – through life insurance products, and non-state pension funds (NPFs) – through the voluntary participation of citizens in such funds. The article discusses the key differences in the activity of the given subjects in the system and also determines the place of life insurance itself in the system of pension insurance in Ukraine. Practical significance. Having considered the key macroeconomic indicators of Ukraine’s economic development, the article predicts the volume of investments into NPFs and insurance premiums for life insurance companies using econometric methods; the benefits and prospects of life insurance are determined. Practical recommendations on the prospects of life insurance development under reforming the pension insurance system in Ukraine are formulated. Value/originality. The modelling of the development of the non-state level of the pension system of Ukraine allowed determining the dynamics of growth of contributions to life insurance companies and contributions to the NPFs in 2017-2020 and drawing a conclusion on the positive prospects for the development of the life insurance market in Ukraine and its special role in the successful reformation of Ukraine’s pension system.

Fiscal and Welfare Effects of Balanced-budget Reforms of Korea’s National Pension System

ABSTRACTThis paper evaluates the fiscal sustainability of the benchmark pension system in Korea, which will come into effect in 2028 following the 2007 pension reforms, and the welfare effects of pension reforms aimed at a balanced budget over the life cycle. To this end, we measure the lifetime pension deficit, i.e. the difference between total pension benefits and total pension contributions in an individual’s lifetime. We find that the benchmark pension system is expected to run an average lifetime deficit of 22.36 million won (approximately $22,360), and the current pension fund is unlikely to finance the sum of future deficits. The optimal pension reform for the zero average lifetime deficit reduces social welfare by as much as a 2.06% fall in consumption and is characterised with the contribution rate of 20.3% and an average replacement rate of 66.4%. These values are much higher than the respective benchmark values, 9% and 40%, because the increase in pension benefits, combined with the increase in pension contributions, can reduce the income inequality due to the progressivity of pension benefits and the proportionality of pension contributions.

The Role of Productivity on the Pension Plan Systems Performance

This paper formulates an analytical framework to analyze whether pension growth can be a determinant of economic growth. The Pension Scheme Performance Evaluation Model (PSPE-Model) intends to study the performance of pension schemes from a macroeconomic perspective. The PSPE-Model tests whether the marginal optimum national pension system coverage critical point based on the national productivity growth performance is simultaneously determined by the efficient coordination of private and public pension system programs coverage and the national productivity level. The model investigates the marginal optimum national pension system coverage critical point of two Asian countries, Japan and Malaysia.

КЛЮЧЕВЫЕ АСПЕКТЫ ИСПОЛЬЗОВАНИЯ СУВЕРЕННЫХ ФОНДОВ В РЕШЕНИИ СТРУКТУРНЫХ ПРОБЛЕМ НАЦИОНАЛЬНОЙ ЭКОНОМИКИ

The problems of increasing the significance and effectiveness of involving sovereign funds in solving the most significant issues of the structural development of the national economy of Russia have been investigated. There is shown the importance of Russia's sovereign funds in such key areas as increasing non-tax revenues of the federal budget, ensuring the stability of the discharge of expenditure obligations, formation of a financial reserve for mitigating the consequences of unfavorable internal and external financial conditions, formation of investment resources for solving structural problems, ensuring the stability of the national pension system. The analysis of the main directions of spending the Reserve Fund and the National Welfare Fund in 2010-2017 is presented. The analysis results show that the debt management model of sovereign funds organized with the participation of Vnesheconombank is not effective enough. This conclusion can be explained by the complete depletion of the Reserve Fund's resources without the due effect for building the national economy's potential, as well as an increase of Vnesheconombank's problem assets to the critical level. It has been stated that the resources of the National Welfare Fund should not be considered as an additional source of domestic investment demand, since they are necessary for long-term sustainability of the pension system exposed to financial risks in the conditions of a stable budget deficit of the Pension Fund of the Russian Federation. It was inferred that it is necessary to form an investment model for managing sovereign funds. This model should base on the investment strategy for the medium term and correspond to the priorities of socio-economic development. An important element of such a strategy should be the regional investment interests, because structural development of the economy is a territorially differentiated problem.

국민연금의 필요성에 대한 태도, 양가감정 및 개혁에 대한 의견과 관련 요인 탐색*

국민연금의 필요성에 대한 태도, 양가감정 및 개혁에 대한 의견과 관련 요인 탐색*

Organizing old age pensions for India’s unorganized workers: A case study of a sector-driven approach

Abstract About 88 percent of India’s total labor force is composed of informal (officially labeled “unorganized”) workers. As many as 388 million such workers lack old age income security by way of a pension system. The Atal Pension Yojana (APY) is the latest contributory, national-level old age pension scheme for unorganized workers, with an entry age of 18–40 years. In other words, all current unorganized workers above the age of 40 are excluded. How could a national pension system viably guarantee equal pension benefits to all current unorganized workers? This paper considers how such a system might work by offering a case study of a non-contributory pension scheme for building and other construction workers in Karnataka State, India. The results indicate that this state-level pension scheme, fully funded by sector-specific receipts, is financially viable and sustainable with high levels of coverage and adequacy. The robustness of these results is shown via sensitivity analyses of discount rates, inflation rates, and growth rates of specific purpose tax collections. Additional analyses outline the scenarios under which pension benefits could be extended to all informal workers in the sector studied.

Organizing Old Age Pensions for India's Informal Workers: A Case Study of a Sector-Driven Approach

About 88 percent of India’s total labor force is composed of informal (officially labeled “unorganized”) workers. As many as 388 million such workers lack old age income security by way of a pension system. The Atal Pension Yojana (APY) is the latest contributory, national-level old age pension scheme for unorganized workers, with an entry age of 18–40 years. In other words, all current unorganized workers above the age of 40 are excluded. How could a national pension system viably guarantee equal pension benefits to all current unorganized workers? This paper considers how such a system might work by offering a case study of a non-contributory pension scheme for building and other construction workers in Karnataka State, India. The results indicate that this state-level pension scheme, fully funded by sector-specific receipts, is financially viable and sustainable with high levels of coverage and adequacy. The robustness of these results is shown via sensitivity analyses of discount rates, inflation rates, and growth rates of specific purpose tax collections. Additional analyses outline the scenarios under which pension benefits could be extended to all informal workers in the sector studied.

Does ruthless information affect confidence in national pension system? :

Does ruthless information affect confidence in national pension system? :

The impact of globalization challenges on pension provision development

The article analyzes pension provision development in the world and the problems of its implementation under the globalization challenges. The main reasons for considering pension provision as a global problem are specified. It is noted that the negative manifestations of globalization are inherent in the Ukrainian practice of pension provision. The purpose of the paper is to study the world’s experience in reforming national pension systems under increasing global negative trends. The research was conducted using the methods of scientific knowledge: comparison and generalization – to establish the essential differences in approaches to the globalization processes studying; analysis and synthesis – to identify regularities in economic development and their determination of social consequences; historical and logical, as well as statistical methods. The article considers some countries’ experience in improving the practice of pension provision. It was established that pension reform was aimed at making the pension age most upon the individual achievements of an employee (pension insurance record, salary, deductions, other personal preferences). In most developed countries, pension funds are provided from three sources: state pension funds, corporate sector pensions and individual pensions received under a contract of personal voluntary pension accumulative insurance. Further development of the pension system in Ukraine should be provided due to the introduction of its second level. As a result of the study, it was found out that global challenges are problems that hinder the normal course of human development. They make a particular negative impact on pension provision. The search for methods to neutralize or mitigate the effects of global challenges has led many countries to introduce a three-tier pension system that involves funding from various sources.

Transformation of Pension Systems in the Countries of Eurasian Economic Union

Current integration processes, develop actively on the territory of Eurasian Economic Union (EEU). A single labour market has been created. Building a model of social interaction between the State Parties of EEU is crucial for the development of longterm strategy of the EEU. The Treaty on the Eurasian Economic Union (2014) provides identifying factors, threats and potential areas of cooperation between the EEU countries in the sphere of pension services. This identification requires systematizing the key indicators of EEU national pension systems. There is a necessity to improve not only the pension system of every country individually but also to search the possibilities for their coordination in the future. From the beginning of 1990th, in all EEU countries, the pension systems have been establishing and developing. The authors present the brief review and comparative analysis of these systems. We identify their similarities and differences according to set criteria and determine possible areas for integration of pension systems in EEU. We consider both the socio-economic parameters (including retirement age, amount of pension payments, pension payment procedures and pattern of pension payments) and the demographic features of the EEU countries. The paper systematizes the macroeconomic and population indicators. On their basis, we reveal the opportunities and risks for the EEU countries cooperation in the sphere of pension system. To investigate the pension systems of EEU countries, we applied the methods of logical, comparative and statistical analysis. The results of this study indicate that the coordination of the pension systems of EEU countries needs cooperation in four directions. First of all, it is necessary to elaborate the single principles of social guarantees for retirees. Secondly, there is a need to ensure guaranteed retirement income. Thirdly, single basic approaches for the regulation of investment activities of pension funds should be elaborated. Last, single data bank for pension provision can be created.

Europeanization in Pension Policy: the Crisis as a Game-Changer?

The actual effects of the European Union (EU) on member states’ pension policy are more extensive and complex than the contractual basis suggests. In addition to the Open Method of Coordination, a genuine instrument of social policy, ‘cross-effects’ of the freedom of the internal market mediated by the ECJ, as well as fiscal policy ‘interventions’ in member states experiencing financial difficulties have risen in importance. The sovereign debt crisis has functioned as a ‘game changer’ that re-adjusted the balance between European influence and national autonomy, but so far only for the countries hit most by the crisis. As European influence in this supposed ‘new phase’ differs markedly depending on the respective budgetary situation as well as the ‘well-preparedness’ of national pension systems due to previous reforms and as informal rather than formal ways of exerting pressure were chosen, the consequences for other member states and the European pension policy ‘architecture’ as a whole are yet unclear.

WORKING LIFE EXPECTANCY WITH AND WITHOUT DISABILITY AT AGE 55 IN THE NETHERLANDS, GERMANY AND USA

Due to population aging, many countries are reforming their policies by abolishing early retirement routes and raising statutory retirement ages. As health deteriorates with age, many older workers may experience that health limits their workability. The necessity to continue working may depend on the flexibility and generosity of a national pension system. Flexibility refers to early retirement opportunities and their entitlement conditions, and generosity to the post-retirement income as percentage of pre-retirement income. This study compares working life expectancies at age 55 (WLE55) with and without disability across countries differing in pension system. Three countries were selected with decreasing flexibility and generosity: Netherlands, Germany, and United States, using data from the Longitudinal Aging Study Amsterdam (LASA), German Aging Study (DEAS) and the Health and Retirement Study (HRS), respectively. Participants aged 55–65 years at baseline (2002) with a paid job were selected and followed up to 2012/2014 (n=385, n=273 and n=2335, respectively). Two health states were distinguished based on difficulty climbing stairs: with and without disability. WLEs were estimated using the MSM and ELECT packages in R. In the Netherlands, total WLE55 was 5.3 years of which 0.6 with disability. In Germany, total WLE55 was 4.6 years of which 1.1 with disability. In the US, total WLE55 was 7.4 years of which 2.4 with disability. Flexibility and generosity seem to affect the number of working years of older adults both in total and with disability. Governments should be aware that disabled workers need special attention regarding their work environment.

Applying spectral biclustering to mortality data

We apply spectral biclustering to mortality datasets in order to capture three relevant aspects: the period, the age and the cohort effects, as their knowledge is a key factor in understanding actuarial liabilities of private life insurance companies, pension funds as well as national pension systems. While standard techniques generally fail to capture the cohort effect, on the contrary, biclustering methods seem particularly suitable for this aim. We run an exploratory analysis on the mortality data of Italy, with ages representing genes, and years as conditions: by comparison between conventional hierarchical clustering and spectral biclustering, we observe that the latter offers more meaningful results.

Job displacement and social safety net on depressive symptoms in individuals aged 45 years or above: findings from the Korean Longitudinal Study of Aging

ABSTRACTThis study aimed to investigate the relationship between the unemployment experience and depressive symptoms among mid-aged (ages 45–59) and elderly (ages 60 or above) persons and to examine further the effects of unemployment insurance, industrial accident compensation insurance (IACI) and national pension on the stated relationship. Data were used from the Korean Longitudinal Study of Aging (KLoSA) between 2006 and 2012. A total of 1,536 individuals employed at the 2006 baseline were followed. The association between employment status change during 2006 to 2008, 2008 to 2010 or 2010 to 2012 and depressive symptoms in years 2008, 2010 or 2012 were analysed using a generalised estimating equation model. Depressive symptoms were measured with the Center for Epidemiological Studies Depression Scale (CES-D 10) scale. The results showed that the ‘employed to unemployed’ group had statistically significant increases in depression scores in the mid-aged (β = 0.4884,p= 0.0038) and elderly (β = 0.8275,p⩽ 0.0001) categories, compared to the ‘employed to employed’ group. Findings were maintained in groups without a social safety net. Contrastingly, the ‘employed to unemployed’ groups with unemployment insurance and IACI did not show statistically significant increases in depression scores. The ‘employed to unemployed’ category of individuals enrolled in the national pension system exhibited a lower increase of depression. Therefore, an enhanced focus on the mental health of unemployed individuals is required, in addition to the provision of a reliable social safety net.

WORLD EXPERIENCE AND RUSSIAN PRACTICE OF THE PENSION SYSTEM’S REVENUE FORMATION: MATHEMATIC METHODS OF ESTIMATION

The article is devoted to the methods of revenue formation of the Pension system. Effective functioning of the Pension system in any country depends on the applied methods of revenue formation of the State Pension system. Thus, the problems of the Russian pension system disclosed in the article are caused by the inefficient methods of revenue formation of the Pension Fund of Russia. The theoretical views on conditions that determine the quality of the work of the pension system are reviewed. The methods of revenue formation of State pension systems in different countries of the world and conducted pension reforms are analyzed. The studies evaluating the effectiveness and sustainability of State pension systems usually use mathematical methods and actuarial calculations. Mathematical apparatus applied in the article allowed calculating the formal conditions of balance of the State pension system, considering compliance with the equivalency and compensatory contributions and payments. The publication outlines the mathematical formulas that describe the conditions of equivalence and retribution observance. The study revealed that the methods of revenue formation of State pension systems are social insurance and social security. Social insurance applies the techniques of pension social risks redistributing insurance and social security uses tax tricks redistribution of the National income. The method of social security reduces the motivation of contributors to pay obligatory payments to the State Pension Fund. Therefore, in Russia there is significant evasion. The authors considered using the distribution and accumulation method of revenue formation of the State Pension system. The article demonstrates that, various methods of revenue formation of the State Pension system are actively used in the world Highlights 1. The balance between the pension system revenue and the expenses for pensions is an important characteristics of a national pension systems 2. The stability of the pension system based on the distribution method of forming revenue is ensured by the compliance of the insurance premium tariff with the macroeconomic and demographic conditions of the country’s development; the stability of the pension system based on a funded method of forming revenue is ensured by the real annual return of pension savings placed in investment assets 3. The Russian pension system is unbalanced due to the significant scale of evasion from the pension insurance contributions 4. Mathematical calculations have shown that solving the problems of the Russian pension system is possible by increasing the motivation of citizens and organizations to pay the pension insurance contributions; expand the application of the funded method of pension system revenue formation and ensure a real level of return on the assets of pension savings For citation Budko S. A., Fedotov D. Yu. World Experience and Russian Practice of the Pension System’s Revenue Formation: Mathematic Methods of Estimation. Journal of Tax Reform , 2017, vol. 3, no. 3, pp. 199–215. DOI: http://dx.doi.org/10.15826/jtr.2017.3.3.040 Article info Received October 19, 2017 ; accepted November 27, 2017

Sugerencias para la re-reforma de pensiones en el Perú

This essay proposes the need for an integral re-reform of the Peru pensionsystem, preceded by broad social dialogue, in order to overcome this system’smajor flaws. As well as a comprehensive model of re-reform, it recommendsspecific measures that: extend the low level of coverage of the labor forceand the elderly, expand Pension 65, guarantee the minimum pension, improvebenefits, unify the national and private pension systems, increase competitionand reduce the high administrative costs and profits of private pension funds(AFP), create a public AFP, strengthen financial and actuarial sustainability, raisecapital returns, and shift the disability-survivors premium to employers. Thisproposal also favors mandatory rather than voluntary affiliation to the AFP.