Occupational Pension Research Articles

Product Oversight and Governance’s Actual Trends and Value for Money Provisions Within the IDD Framework

Abstract The article focuses on the renewed discipline of product oversight and governance in insurance law. Specifically, the contribution examines the significance of the value for money principle, which, through acts by the European Insurance and Occupational Pensions Authority (EIOPA), has had a considerable impact on the organization of insurance companies as well as on the policies ultimately distributed. Regarding the structure of the article, the first part addresses the contractual characterization provided by the Court of Justice of the European Union (CJEU) of so-called IBIPs (investment-based insurance products), for which the value for money principle is particularly impactful. The second part of the article focuses on the operation of product oversight and governance and the influence of the value for money principle on it. Finally, the last part of the analysis centers on the relationship between the CJEU’s precedents and their integration into the harmonizing policy conducted by European institutions, which inevitably also affects the field of financial and insurance law.

Should the Occupational Pension Plans’ Investment be Long-Term or Short-Term? Evidence from China

Should the Occupational Pension Plans’ Investment be Long-Term or Short-Term? Evidence from China

Reforming the Dutch pension system to ensure sustainability

AbstractThe Netherlands is on the brink of reforming its system of occupational pensions as part of a more general reform of its three‐pillar pension system. This reform features important changes to first pillar pension benefits. The focus of this article is however on the coming reform of occupational pensions, the second pillar of the system, which concerns both pension contributions and benefits. This reform is related to a series of reforms that have gradually transformed the pension contract that was dominant 20 years ago, a final salary defined benefit contract, into a collective defined contribution contract. We argue that these reforms are a response to changes in the external environment, such as population ageing and a secular decline of interest rates. The coming reform responds to the call for a pension scheme that is more individualistic, more closely connected to the labour market, and which does not share interest rate risks between generations. The New Pension Contract remains in part collective, since the assets of participants are invested collectively, and a mandatory solidarity fund can be used for intergenerational risk sharing.

The Principle of Proportionality: Unraveling the Practical Application of Proportionality in the EU Regulations and the Solvency II Directive for Insurance Undertakings

Proportionality, pivotal to EU regulations and Solvency II, tailors rules to insurers’ size and complexity. Inconsistent application by supervisory authorities (NSAs) necessitates clarity to prevent undue costs. This study examines the issue via a review of the literature and industry discussions, emphasizing Solvency II’s introduction of proportionality and the varied interpretations it evokes. Transparent communication is crucial, and regulatory evolution must align with market dynamics, with the European Insurance and Occupational Pensions Authority (EIOPA) fostering convergence. Assessing proportionality mandates a comprehensive evaluation of an insurer’s nature, scale, and complexity. Regulatory distinctions between first-party and third-party risks could enhance market efficiency. Ultimately, a holistic, market-oriented approach is essential for proportionate regulation in the insurance sector, requiring concerted efforts to elucidate frameworks, foster transparency, and align regulatory evolution with market dynamics.

A Model for Occupational Pensions Privately Administered for Police and Military Personnel

Abstract In the context of legislation introduced in Romania through Law 1 of 2020 regarding occupational pensions, this paper presents an evaluation of occupational pension system for police and military personnel and takes into consideration privately administered funds that would complement the current system. The paper evaluates the impact of the complementary occupational pension system, focusing on its dual role as both a fiscal instrument for internal financing within Romania and a mechanism for enhancing social and economic security for retired police and military staff. The occupational pension system can diversify funding sources, potentially easing the national public debt burden, while offering a sustainable and adequate retirement income for service members. Furthermore, the analysis extends to the occupational pension system's efficacy in fostering workforce stability, particularly post-eligibility for military state pensions. The study addresses the system's potential influence on staff motivation and retention, underpinning its role in maintaining a robust and committed service workforce. This simulation-based study leverages international models and legislative frameworks to corroborate these benefits, providing a nuanced understanding of the occupational pension system’s role in the broader context of public service pensions.

Relationship between Occupational Pension, Corporate Social Responsibility (CSR), and Organizational Resilience: A Study on Listed Chinese Companies

Numerous researchers acknowledge that the occupational pension protects employees. However, in China, the total cost of occupational pensions is shared between employees and employers, representing a significant financial commitment. This study aimed to explore the effect of the occupational pension on corporate social responsibility (CSR) and organizational resilience. Drawing on insights from cost-stickiness and resource-based theories, we developed a model that elucidated the influence of occupational pensions on firms’ approaches to CSR within the context of COVID-19 and how this, in turn, impacted organizational resilience. This study categorized CSR into strategic and responsive activities, employing the concept of cost stickiness as a framework. We analyzed a sample of 34,145 observations from Chinese A-share listed companies spanning the period 2010–2023 to examine the influence of occupational pension adjustments on CSR strategies. The findings of this study revealed that the cost pressure associated with contributions to occupational pensions prompted firms to decrease their engagement in responsive CSR activities while enhancing their strategic CSR initiatives. Furthermore, it was observed that strategic CSR contributed to improved organizational resilience, whereas responsive CSR did not exhibit the same effect. The relationship between occupational pension contributions and CSR was found to be significantly and negatively moderated by factors such as the minimum wage and population aging. Conversely, the relationship between CSR and organizational resilience was significantly and positively moderated by digital transformation and marketing capabilities.

Occupational Pension Provision in Germany

Occupational Pension Provision in Germany

Rentenpolitik nach dem Haushaltsurteil: keine Maximalforderungen

Abstract German pension policy faces a dilemma. If it is too generous, it harms contributors, disincentivises labour supply, and crowds out education and infrastructure investment needed to pay for social protection. If it is too frugal, it harms those with social and health issues. Thus, smart compromises are required rather than maximum demands. We propose a policy mix with five elements: 1) determine the pension level in a sustainable and generation-appropriate way; 2) link retirement age to life expectancy; 3) limit early retirement to those in poor health; 4) abolish mandatory retirement; 5) encourage a mix of pay-as-you-go and funded occupational pensions.

Addressing Longevity Inequality: How Retirement Age Differentiation Can Be Implemented

Abstract Differences in life expectancy across socioeconomic groups create a serious problem of inequality within the public part of the pension system. This article considers two actuarially sound ways of addressing longevity inequality. The first is to allow low life-expectancy workers to retire earlier and delay the retirement of the high life-expectancy workers so that the two groups receive the same amount, equal to the expected discounted value of future pension benefits received by the average worker under the current system. The second, and more radical, is to delegate to occupational pension funds the task of paying out the public pension benefits to each retiree, based on a lump-sum transfer from the government to the pension funds of an amount for each retiree equivalent to the payout in the first scenario. (JEL codes: E21 and E24)

The gig economy, platform work, and social policy: food delivery workers’ occupational welfare dilemma in Hong Kong

Abstract Previous literature suggests that the gig economy and platform work pose challenges to social policy, including the welfare entitlement issues caused by workers’ ambiguous occupational status. Focusing on the government’s regulatory role, this study investigates platform workers’ occupational welfare (OW) by conducting in-depth interviews with forty-six food delivery workers in Hong Kong. The evidence reveals workers’ occupational risks resulting from platforms’ algorithmic devices and the misclassification of independent contractors. The denied access to private occupational pensions was considered acceptable by workers because of the perceived irrelevance of OW. While interviewees emphasised time-based flexibility as a key intangible benefit, the shifting business costs to self-employed workers was highlighted as a disadvantage. A policy dilemma appears between strengthening state regulation/protection and maintaining workers’ temporal autonomy. Arguably, the platformisation of work is translated into the gigification of OW, disentitling platform workers’ employer-provided welfare and labour protection. Platforms possess monopolising power over workers, the state displays weak regulatory power to monitor platforms, and workers’ occupational citizenship is undermined by the government’s minimal intervention. This study contributes to the literature by linking OW to platform work and revealing how the gig economy reshapes social policy, empirically offering a worker-centred analysis of OW in Hong Kong.

Тенденции изменения архи- тектуры наиболее устойчивых многоуровневых пенсионных систем

The article presents a study of the unfunded (distributive) and funded (accumulative) components in multi-level pension systems in different countries around the world. The existing foreign practices of building pension systems are reviewed. It is proved that high sustainability indicators are achieved in those countries where a combination of the unfunded and funded components is used. The relevance of the topic is conditioned by the accrued problems in the pension sector, largely associated with the aging of the population and low birth rate. To conduct the study, the authors turned to countries with multi-tier, most stable pension systems, such as Denmark, the Netherlands, Australia, Sweden, Canada, New Zealand, Finland and Latvia. As a result, a number of features of the pension systems under consideration were identified. Within the state level of pension systems, the amount of payments depends on various criteria and conditions, the use of which is aimed at making payments more targeted. In countries where occupational pension schemes are developed, participation in them is mandatory for employees and employers. At the same time, voluntary pension schemes are used much less frequently by the population of the countries under study.

The Life and Non-Life Insurance Market in the European Union

The article discussed on the situation of the life and non-life insurance market in the European Union as seen at the end of 2022. The market analysis was based on data derived from the European Insurance and Occupational Pensions Authority (EIOPA) and the Organization for Economic Cooperation and Development (OECD) and included such factors as the number of insurers, the division into life insurance and non-life insurance, and the key market indicators (written premium, density and penetration rates, and concentration index). The collected data shows the life and non-life insurance market in 27 European Union Member States. The largest number of insurers is in the French, German and Luxembourg markets, the smallest in the Slovak, Estonian, Lithuanian and Latvian markets. It was noted that the more insurers sell insurance in a country, the lower the concentration ratio. Germany and France had the largest share of the global business insurance market in 2022 from EU countries. Overall, EU residents in 2022 spent more on life insurance (€652.2 billion) compared to non-life insurance (€495.2 billion). Residents of EU countries spend most of their life insurance money on index-linked and unit-linked insurance and insurance with profit participation. The largest share of EU residents’ non-life insurance spending is in: Fire and other damage to property insurance, Motor vehicle liability insurance and Other motor insurance. Just as these countries differ significantly in economic terms, they also do so from the life and non-life insurance market standpoint.

Assessing the efficiency of occupational pension funds in Greece

Assessing the efficiency of occupational pension funds in Greece

Characteristics of employment history and self-perceived barriers to healthcare access.

Research suggests that people in disadvantaged social positions are more likely to perceive barriers to accessing healthcare, especially to specialists and preventive services. In this study, we analyze if adversity during past employment histories (e.g. spells of unemployment) is linked to subsequent subjectively perceived barriers in healthcare access. Further, we investigate if the associations vary according to national healthcare access and quality indicators. We use data from the Survey of Health, Ageing and Retirement in Europe with a study sample of 31 616 men and women aged 52-80 from 25 countries. Data include retrospective information on employment histories allowing us to derive characteristics of past careers, including the number of unemployment periods, main occupational position and pension contributions. Barriers to healthcare access are measured by self-perceived forgone care due to costs and unavailability of services. We apply multilevel Poisson regression for binary outcomes and test for cross-level interactions between career characteristics and national healthcare system characteristics. Career characteristics are linked to later self-perceived healthcare access barriers, consistently in the case of cost barriers and less consistently for unavailability of services. Associations are similar for men and women, and persist after controlling for current income, wealth and subjective health. We find no cross-level interactions between career characteristics and country-level healthcare access and quality indicators. Self-perceived barriers to healthcare access are linked to people's past working lives. More in-depth investigation is needed to identify the reasons for the lingering effects of characteristics of employment history on reduced healthcare access.

Risk Factors for Food Insecurity among Older Adults in India: Study Based on LASI, 2017-2018.

Food security is linked to the nutritional status and well-being of older adults. India is a rapidly aging nation that ranks highly on the 2022 Global Hunger Index. This paper examines the prevalence and risk factors of food insecurity in India's older population. We used data from the 2017-2018 Longitudinal Aging Study in India. The sample size was 31,532 adults aged 60 years and above. Food insecurity was measured using a four-item version of the Food Insecurity Experience scale. Multivariable logistic regressions using individual-level weights were implemented to assess the risk factors of food insecurity. The prevalence of food insecurity was 10.5% in the weighted sample. Sociodemographic factors were important in explaining food insecurity. Older adults who were male, younger, lowly educated, socially disadvantaged, in rural areas, and outside the Northern region were most vulnerable to food insecurity, controlling for various confounders. Additionally, low economic status, no occupational pension, currently working, social isolation, physical impairment, functional disabilities, poor self-rated health, and arthritis were associated with an increased risk of food insecurity. More active food assistance programs catering to older adults and a better provision of economic and social security are warranted to establish a food-secure environment for rapidly aging India.

The displacement effect of compulsory pension savings on private savings. Evidence from the Netherlands, using pension funds supervisory data

We show heterogenous displacement effects of mandatory occupational pension savings on private household wealth for different groups. Richer households in particular show larger displacements. This contributes to explaining why empirical studies often come with different estimates of this effect. We study the case of the Netherlands, where wage employed and self-employed workers are differently exposed to compulsory pension savings, and the institutional setting provides exogenous variation in pension wealth that can be used as instrument in the analysis. We use rich administrative data on (pension) wealth and income combined for the first time to supervisory data of pension funds. Our results show a displacement effect of −37% for wage employed and of −61% to −77% for self-employed people. The higher displacement effect we find for the self-employed might be explained by the fact that self-employed workers are arguably more aware of their pension accrual, or lack thereof, because there is no employer who organizes and (partly) pays this for them.

Regulation from the inside? Internal supervision in Dutch pension funds

Political economists have long acknowledged the importance of funded pensions acting as catalysts for processes of financialization. The transformation from rule- to risk-based pension fund governance is particularly important for pension financialization. Risk-based governance involves monitoring of internal decision-making procedures by new professionals rather than compliance with highly detailed legal restrictions. Scholars of financial regulation have termed this kind of supervision ‘regulation from the inside’. Being part of the organization they monitor, internal regulators hold fundamentally ambivalent positions. Existing studies emphasize the duality of internal regulators’ role perceptions as well as their attempts to span the boundaries between themselves and other organizational actors. In this paper, we extend scholarly insights on risk-based supervision of private (non-)financial institutions to pension institutions by focusing on a peculiar form of ‘regulation from the inside’: so-called internal supervisors in Dutch occupational pension funds. Internal supervisors are pension fund functionaries, responsible for evaluating the governing board's performance and holding the board accountable. We report findings from an original survey and interview study among internal supervisors. Contrary to the formal requirement of independence between governing board and internal supervision (a ‘checks and balances’ perspective), we find that internal supervisors often adopt a ‘fusion of powers’ approach that emphasizes collaboration with the governing board. We attribute this finding not only to internal supervision’s institutional design but also to the highly networked character of Dutch pension governance.

A Comparative Study of Immediate Annuities and Ordinary Annuities in establishing the Phantom of Zero Liability Under the Trusteeship Pension Valuation Structure

Background: The liabilities of a pension scheme define the financial value to be paid at a definite period in the future. The underlying goal of pension plans is to provide retirees with sufficient stream of income to enable them to live a decent financially independent life post-employment period. The regulatory framework for occupational pension schemes necessitates the services of trustees as administrators who assume legal administrative responsibilities on the scheme and saddled to oversee actuarial valuations of the scheme's liabilities at definite points in time. Objectives: The objective of this paper is (i) to empirically examine the drivers of pension liability and how they are evaluated by the trustee’s model. (ii) Specifically, the study intends to use input parameters of the trustee model to establish the conditions for which the value of liability is zero under trusteeship annuity factor. Methods: This study applies trustees’ valuation model, the present values together with infinitesimal calculus. Salary data as well as demographic data were obtained from an agricultural production services company located in Jos-South, Nigeria. Results: Computational evidence from our results proves that the total service liability under the conditions of the current model is vanishingly zero. However, when the annuity factor is replaced by life table annuity, the service liability does not vanish. Conclusion: The total service liability obtained as zero therefore initiates inquiry as to whether this current valuation framework causes potential uncertainties for the pension trustees who are responsibly saddled with both administration and core decision-making responsibilities of the system.

분할연금 지급에 따른 연금소득 과세 개선 방안

Our country has the highest divorce rate in the world, disgracefully. Recently, the payment of installment pensions, which receive half of the pension amount, has continued to increase for public pensions. The split pension system has been implemented in the national pension system since 1999, and the special occupational pension system has been implemented in 2016. Currently, the divided pension is taxed in half. However, this taxation system is not only less taxable than the existing taxation system, but may also have intentional tax evasion.
 A split pension can be seen as a type of property division. Currently, there is a taxable issue in the divided pension paid according to the marriage period and the period of office for the divided pension right. In this study, we would like to examine the split pension system in which payments are increasing as the divorce rate of the elderly increases rapidly, and to find problems with the taxation system and ways to improve it. The split pension is distributed by the principal beneficiary according to the marriage period and received by the principal beneficiary and the divorced spouse, and a somewhat small tax burden is incurred because they are received separately than the amount paid by the principal beneficiary. For this reason, even while maintaining a marriage, there is a possibility that the split pension may be abused by the method of disguised divorce for the purpose of reducing the tax burden. In light of this situation, this study attempted to raise the need to improve the tax system of the divided pension paid by the public pension and establish a tax plan for the pension tax system in line with the characteristics of the divided pension system. The taxation plan proposed in this study not only minimizes problems arising from the implementation of the public pension split pension system, but also aims to establish a reasonable taxation plan for the split pension system in accordance with the pension income taxation system. Policy alternatives in this study are expected to help tax authorities or related ministries establish policy alternatives in the future.

Research on Replacement Rate from Occupational Pension in China and Influencing Factors

Under the background of the pension system reform in government departments and public institutions, occupational pension is an important supplement to basic endowment insurance, and provides retirement income in the form of a complete accumulation mechanism. By constructing an actuarial cash flow balance model, this study calculates the replacement rate from occupational pension for “new people” who begin to work in government departments and public institutions in 2015 onwards, and analyzes its influencing factors such as retirement age, rate of investment return, contribution rate, wage growth rate, etc. The results reveal that delaying retirement, increasing the rate of return and increasing the rate of contribution have significant positive effects on the growth of the replacement rate. Meanwhile, the increase in wage growth rate has a negative impact on replacement rate. When the influencing factors are the same, the replacement rate of men is about 5% higher than that of women. The main reason is that the average life expectancy of women is longer. The policy suggestions are as follows: appropriately delaying retirement to adapt to the changes in demographic structure; optimizing investment operations to ensure investment return; improving rate of individual contribution flexibly to accelerate the accumulation of funds.