Retirement Schemes Research Articles

Influence of health, lifestyle, working conditions, and sociodemography on early retirement among nurses: The Danish Nurse Cohort Study

The aim of the study was to analyze the relationship between health, lifestyle, work-related and sociodemographic factors, and older nurses' exit from the labor market to Post-Employment Wage (PEW). PEW is an early retirement scheme to make it possible for workers to retire at the age of 60. The study was based on 5,538 nurses in the age of 51-59 who in 1993 completed a questionnaire on health, lifestyle, working environment, and sociodemographic factors. The survey information was combined with longitudinal data from the Danish Integrated Database for Labor Market Research compiled by Statistics Denmark. The follow-up period was from 1993 to 2002. Nurses who had poor self-rated health were more likely to join PEW compared with nurses who considered their health as good (HR 1.28, 95% CI 1.16-1.41). Low job influence, high workload, and physical job demands only marginally increased the probability of retiring. Nurses who have relatively low gross incomes had an increased probability of entering PEW compared with nurses with relatively high gross incomes (HR 1.60, CI 1.43-1.79). Having a spouse increased the probability of joining PEW, especially having a spouse who had retired or was unemployed. The retirement age among nurses is influenced by a number of sociodemographic, work-related, and health-related factors. Poor health, low income, living outside the Copenhagen area, being married, having a spouse who is outside the labor force, and working in the daytime are all predictors of early retirement among nurses. Poor working environment only marginally increased the probability of retiring early.

The Impact of Early Retirement on Perceptions of Life at Work and at Home: Qualitative Analyses of British Civil Servants Participating in the Whitehall II Retirement Study

This study examined pathways to retirement and the role of circumstances at work and at home (including the introduction of financially-enhanced early retirement schemes) on retirement-related decision-making. In-depth qualitative interviews were conducted within 2 years of retirement with 59 British civil servants participating in the Whitehall II Study. Focusing on the experiences of 33 interviewees who spontaneously discussed "early retirement" we identified three pathways to retirement (non-applicants, successful applicants, and unsuccessful applicants for early retirement) each influenced by a range of complementary positive and negative factors at work and at home. The early retirement schemes influenced the balance between these factors in three ways: by encouraging participants to reflect on (and reconsider) existing retirement plans; by offering financial incentives to retire early; and because they were part of the ongoing process of restructuring and downsizing within the Civil Service which was accompanied by a perceived deterioration in conditions at work.

Icelandic pension system

The pension system in Iceland is chiefly characterised by the operation of occupational pension funds. Although the minimum contribution rate is set by law, the system is not a pure defined contribution system as the minimum benefits are also stipulated in the pension law. The system is thus a hybrid between a defined benefit and a defined contribution system. The age distribution among the Icelandic population is relatively favourable, compared with continental Europe, and the number of retirees, compared with the working age population, is currently low and is estimated to remain so for the next few decades. The asset-building nature of the current pension system therefore makes it unlikely that a higher dependency ratio will result in a fund shortage or require higher taxes to finance retirement schemes in the future. This paper describes the Icelandic pension system in detail.

Risk Classification and Public Policy

The economic effects of prohibiting the use of sex and other potentially discriminatory risk classifiers such as age, race or nationality are subject of a lasting debate among insurance economists. It can be traced back to the 1950s and received broad economic attention in the 1980s when spiralling car insurance premiums in the U.S. were blamed on tariff regulations prohibiting the use of sex, age and location as risk classifiers. The majority view today is that the problem of adverse selection arises if insurance firms are unable to distinguish between different types of risks. Risk classification, in this view, is not only a necessary but also a good thing. The leading justifications for risk classification are that without risk classification, low risks are unfairly forced to subsidize high risks, and that risk classification promotes socially beneficial efforts to prevent loss. Dissenting authors have demonstrated that the efficiency cost of prohibiting risk classification are much less than commonly stated. It depends critically on the propensity of people to self-insure (price elasticity of demand). It will therefore differ among branches of insurance, for example be higher for voluntary retirement schemes where savings alternatives exist than for life insurance with few substitutes. It will also differ according to regulatory embeddings, e.g., be non-existent in mandatory insurance schemes (if properly enforced). Critics have also demonstrated that risk classification can be socially wasteful. This is the case if it becomes purely selective. In a world of competitive voluntary insurance, eliminating the most risky from an insurance pool is a powerful tool of competition. It reduces the average cost of insuring the members of the pool, allowing the insurer to offer a lower price and, possibly, obtain a greater profit. This adverse selection ‘‘on the side of the insurers’’, while individually rational, produces a result that is contrary to the interest of society. It inhibits the ability of insurance to spread risk. The latest blow against risk classification comes from the EU’s directive implementing the principle of equal treatment between women and men in the supply of goods and services. This so-called ‘‘Gender Equality Directive’’ aims to prohibit the

Early Retirement Behaviour in the Netherlands: Evidence from a Policy Reform

In the early 1990s, the Dutch social partners agreed upon transforming the generous and actuarially unfair PAYG early retirement schemes into less generous and actuarially fair capital funded schemes. The starting dates of the transitional arrangements varied by industry sector. In this study, we exploit the variation in starting dates to estimate the causal impact of the policy reform on early retirement behaviour. We use a large administrative dataset, the Dutch Income Panel 1989-2000, to estimate hazard rate models for early retirement. We conclude that the policy reform induced workers to postpone early retirement. In particular, both the price effect (reducing implicit taxes) and the wealth effect (reducing early retirement wealth) are shown to have a positive impact on the early retirement age. Yet, we show that model specifications including the most commonly used financial incentive measures are open to further improvements, given that these are outperformed by a simple specification with dummy variables.

Early Retirement Behaviour in the Netherlands: Evidence from a Policy Reform

In the early 1990s, the Dutch social partners agreed upon transforming the generous and actuarially unfair PAYG early retirement schemes into less generous and actuarially fair capital funded schemes. The starting dates of the transitional arrangements varied by industry sector. In this study, we exploit the variation in starting dates to estimate the causal impact of the policy reform on early retirement behaviour. We use a large administrative dataset, the Dutch Income Panel 1989-2000, to estimate hazard rate models for early retirement. We conclude that the policy reform induced workers to postpone early retirement. In particular, both the price effect (reducing implicit taxes) and the wealth effect (reducing early retirement wealth) are shown to have a positive impact on the early retirement age. Yet, we show that model specifications including the most commonly used financial incentive measures are open to further improvements, given that these are outperformed by a simple specification with dummy variables.

A simulation-based interval two-stage stochastic model for agricultural nonpoint source pollution control through land retirement

This study presents a simulation-based interval two-stage stochastic programming (SITSP) model for agricultural nonpoint source (NPS) pollution control through land retirement under uncertain conditions. The modeling framework was established by the development of an interval two-stage stochastic program, with its random parameters being provided by the statistical analysis of the simulation outcomes of a distributed water quality approach. The developed model can deal with the tradeoff between agricultural revenue and “off-site” water quality concern under random effluent discharge for a land retirement scheme through minimizing the expected value of long-term total economic and environmental cost. In addition, the uncertainties presented as interval numbers in the agriculture-water system can be effectively quantified with the interval programming. By subdividing the whole agricultural watershed into different zones, the most pollution-related sensitive cropland can be identified and an optimal land retirement scheme can be obtained through the modeling approach. The developed method was applied to the Swift Current Creek watershed in Canada for soil erosion control through land retirement. The Hydrological Simulation Program-FORTRAN (HSPF) was used to simulate the sediment information for this case study. Obtained results indicate that the total economic and environmental cost of the entire agriculture-water system can be limited within an interval value for the optimal land retirement schemes. Meanwhile, a best and worst land retirement scheme was obtained for the study watershed under various uncertainties.

Reversing the Trend from “Early” to “Late” Exit: Push, Pull and Jump Revisited in a Danish Context

Denmark is a low exit country in EU-25. As such, the Danish experience contradicts most wisdom in mainstream research on the causes of early exit/retirement. The Danish labour market is one of the most brutal vis-a-vis older workers in Europe, while the Danish early retirement schemes are among the most generous in Europe. For these reasons one should expect Denmark to be a high exit country. The contrary is true. With this background, it is argued that cultural and social–psychological factors play a far stronger role in shaping retirement patterns than we tend normally to assume. Accordingly, in recent years Denmark has employed cultural steering based on the voluntary participation of firms and other social partners in attempts to raise further the employment rate of older workers. Cultural steering has been supplemented by the introduction of “positive” incentives, that is, individuals and municipalities are rewarded economically if retirement is postponed.

Forecasting Spanish Natural Life Expectancy

Knowledge of trends in life expectancy is of major importance for policy planning. It is also a key indicator for assessing future development of life insurance products, substantiality of existing retirement schemes, and long-term care for the elderly. This article examines the feasibility of decomposing age-gender-specific accidental and natural mortality rates. We study this decomposition by using the Lee and Carter model. In particular, we fit the Poisson log-bilinear version of this model proposed by Wilmoth and Brouhns et al. to historical (1975-1998) Spanish mortality rates. In addition, by using the model introduced by Wilmoth and Valkonen we analyze mortality-gender differentials for accidental and natural rates. We present aggregated life expectancy forecasts compared with those constructed using nondecomposed mortality rates.

Promoting Employment among Ageing Workers: Lessons from Successful Policy Changes in Finland

Among EU15 countries Finland has witnessed the largest increase in the employment of ageing workers since the late 1990s. In these years there was a rapid change from the policy of promoting early retirement to the policy of promoting staying at work. Furthermore, this rapid shift to a restrictive early exit policy took place in a situation that was especially demanding due to exceptionally high unemployment among elderly employees. This paper considers why and how the Finnish policy has been successful earlier than other EU countries in encouraging ageing workers to stay on at work. We argue that the positive change in employment is an outcome of the interplay between favourable economic trends and wide-scale work promotion measures. These work promotion measures include the restrictive changes in early retirement schemes. A severe recession in the early 1990s is an important background factor both for the increased need for reforms in the early retirement schemes and also for making the reforms politically more acceptable.

The Employment of Older People: Can We Learn from Japan?

The level of employment among older people, including those above retirement age is very high in Japan. This has been attributed to the lifetime employment system, and provisions for external transfers and demotions that allow wages to be reduced as people pass middle age. The paper points to how the structure of Japanese industry is also important and how many older Japanese are working in relatively unproductive and sheltered jobs. Moreover, it questions whether the lifetime employment system can survive, and shows how early retirement schemes, similar to those in the west, are being introduced as a response to continued recession. On top of this, external pressures for deregulation are threatening the ability of protected sectors to absorb older people. Japanese employers have a tendency, as do western employers, to discard older people. All employers will, in the face of population ageing, have to learn how to use older people better.

Sustainable pensions and retirement schemes in Hong Kong

Over the next 20 years, Hong Kong will face a rapidly ageing population as the number of older adults aged 65 or above increases to approximately 2.26m by 2033 (26.8 per cent of the total population). Hong Kong has three pillars of old age income security: the Mandatory Provident Fund, personal savings and the financial support that is given to the elderly by adult children. This paper examines how these three pillars would serve their individual purposes and, as a whole, what can be done to sustain retirement protection for the older adults in Hong Kong in coming decades.

MEN’S LATE CAREERS AND CAREER EXITS IN ESTONIA

1. Introduction The ageing of the populations in European countries is giving rise substantial economic and social problems. Reduced inflows of younger workers into the labour market and the longer retirement periods with increased life expectancy have altered the age structure on the labour markets and have put pressure on the retirement systems (Auer, Fortuny 2000). Previous policies of reducing labour supply by early retirement are increasingly affected by the need prolong working life. As labour market participation and employment fall with age, demographic ageing increases the need for efforts in raising the employment rate of older workers. The 2001 Stockholm European Council agreed to set an EU target for increasing the average EU employment rate among older women and men (55-64) 50% by 2010 (Employment in Europe 2003). The Barcelona European Council of March 2002 then concluded that efforts should be stepped up increase opportunities for older workers remain in the labour market. Economic and social reforms in Central and Eastern Europe have had a profound impact on the population development trends. The fertility rate has declined and economic crisis resulted in the shortening of life expectancy. The combined effect of these two factors has contributed a rapid ageing of the population. According the United Nations demographic projection the average share of males aged over 50 equalled 26% in Estonia in 2000 and is expected reach 38% in 2030 while the average share of women aged over 50 will grow from 36% in 2000 47% 30 years later (United Nations 2001). The growing old-age dependency ratio shows that the working-age population is expected support an increasing number of old people (Fortuny et al. 2003). These trends will call for an increase in economic participation of older persons in order prevent future labour shortage in the countries of Central and Eastern Europe (CEEC), including Estonia. The situation in these countries is more complex compared with other European Union countries because the development in the 1990s can be interpreted in two contexts: as a transition from state socialism market economy, and as a movement from an industrial, Fordist model a post-industrial, post-Fordist model which concerns all developed countries (Terk 1999). These two developments intertwined. The socialist labour market was characterised by full employment, no open unemployment, strong regulations leading high employment security and job stability. Even more, life-long employment with one firm or in one profession was supported by the system. However, very liberal reforms stimulated massive restructuring of the enterprises and intensive reallocation of labour. Liberalisation transformed firms into economic units. As a result, overstaffing was reduced, social provisions were relinquished and unemployment was unavoidable (Wagener 2002). The result was a sharp decline in the economic performance, i.e. in a short time the employment started fall (Cazes, Nesporova 2003). The majority of employed persons have voluntarily or involuntarily changed their jobs. A certain proportion of the redundant workers have not been able find a new job and remained long-tern unemployed. The vast changes in the labour market affected different groups in different ways. One ambiguous group has been the older workers. At the start of the transition, working pensioners were the first group be laid off everywhere, many countries introduced early retirement schemes avoid the long-term unemployment of older worker (Fortuny et al. 2003). There were hopes that jobs vacated by older workers would increase employment opportunities for young labour market entrants. This led a substantial drop in the average age at which individuals retire from the labour market, which was already rather low at the beginning of economic transition. Also in Estonia, the sharpest decline in employment in the early 1990s could be observed among older workers. …

Rejuvenation of Amal Products Limited

Amal Products Ltd (APL) was a company situated in the southern part of Gujarat manufacturing intermediate dyes and specialty chemicals, mainly for the textile market. The company incurred losses in 1998 due to the recession in the textile industry and fierce competition from Chinese manufacturers as well as local manufacturers who sold their products at much lower rates than APL. In response to the competition APL went for cost reduction and offered voluntary retirement scheme (VRS) to its employees as one of the measures to reduce cost. 51 out of 264 employees opted for VRS. The case explains the process of VRS adopted by the company and how it helped to save costs. It highlights the role of the human resource department in the successful implementation of VRS and the role of line managers. It explains how a VRS should be handled so that the survivors remain productive. It also mentions the role of various stakeholders in the implementation of VRS. The company has reported profits in 2002.

A Search for the Root Causes of the Underdevelopment of the Hong Kong Annuity Market

It has long been predicted that the human lifespan will increase with medical, technological and economic advancement. In fact, the life expectancy of a newborn baby has climbed a steep slope from 45 in 1900 to 80 in 2001 in many developed countries. Decreasing mortality has allowed people to stay in the workforce longer and to enjoy longer retirements. Life annuity, as an instrument that provides financial protection to those who live ‘‘too long’’, is one of the few businesses that have been directly pulled up the slope by the lifespan cart. Since it was invented, life annuity has been commonplace in the life insurance world. Even though its development has lagged behind that of other insurance products, its important role in offering people financial protection is undeniable. With the reform of retirement and pension systems sweeping the Western world in the past decade, life annuity markets have grown significantly. Asian countries, which are forecast to account for 62 per cent of the world’s population aged 60 and older in 2050 (United Nations, 2003), have recently realized the need to modify their retirement and pension systems. Hence, it will not be surprising to see a growing annuity market in Asia before long. As one of the most developed Asian cities, Hong Kong must also respond to the need for increased retirement savings as its population ages. Although there was already a voluntary private-sector scheme governed by the Occupational Retirement Scheme Ordinance (‘‘ORSO’’), covering about 925,000 workers, in mid-2000, the Hong Kong government decided to establish the Mandatory Provident Fund (‘‘MPF’’), an employerdesignated, private-sector-administered pension scheme that commenced operations on 1 December 2000, as a long-term response to the continued ageing of its population. In embarking on this, Hong Kong was generally expected, like its counterparts elsewhere in the world, including Australia, Brazil, Chile and the U.S., to unleash forces that would help to reshape its long underdeveloped life annuity landscape, which only had 60,681 life annuity contracts in force at the end of 2002. Although it is indisputable that the implementation of the MPF will help to develop the undersized life annuity market in Hong Kong, we believe that there are also a myriad of long

Downsizing at Pennar Industries Limited

Pennar Industries Limited (Pennar), one of the top ten producers of cold rolled steel strips in India, had 650 workers and 630 staff (non-unionized workers, supervisors, and managers) in 1997. Although over-manned and inefficient, the company had been profitable in the domestic market protected by government licensing and high import tariffs. As real competition, unleashed by globalization, began to bite in 1998, the company bought out 142 workers and 224 staff through a Voluntary Retirement Scheme (VRS). The severance compensation offered was very generous. In spite of reducing the workforce and improving productivity, Pennar ran into heavy losses by 2000. The management decided to downsize further, but it had no money to match the 1998 severance package. The surplus workers would have to go with the statutory compensation and staff without any compensation at all. The unions rejected the VRS for workers outright when they learned that it offered just one-third of the compensation given in 1998. They wanted at least two months' pay. The negotiations went on without any change of heart on either side. Each Head of Department drew up a list of their workers and staff to be retrenched and called the redundant staff one by one and told them to resign and leave without expecting any compensation. Many resigned and left but some resisted and abused the managers verbally, but there were no cases of violence or litigation. The new VRS for workers was formally announced on April 20, 2001. None came forward. They stuck to their demand for eight weeks' pay as compensation. Gradually, however, the workers' resistance weakened and they accepted the VRS and left peacefully. This case is useful for examining the human resource management issues and process for downsizing.

What Happened to Wage and Non-Employment Structures During the 'Dutch Employment Miracle'?

Not available in German The Netherlands have experienced an employment miracle since the 1980s. This note investigates what happened to the wage, unemployment, and non-employment structures between 1988 and 1998, when both unemployment and non-employment rates decreased markedly. Surprisingly, I find no significant changes in the wage structures, although there clearly was wage moderation on average. Although there have also been virtually no changes in the unemployment structure, the relative non-employment of older workers (due to incentives to retire) and men increased. Whereas supply effects and early retirement schemes can explain the constancy of the returns to age, the lack of an increase in the returns to education remains a puzzle in the face of well-documented skill-biased technological change in other major industrialised countries. Download Paper: (pdf, 368 kb)

New developments concerning the Orange County employee retirement law

The County Employees Retirement Law of 1937 paved the way for employer‐sponsored retirement programmes to be created. One such programme is the Orange County Employees Retirement System. It was implemented in 1945 to provide retirement benefits for public service employees. Since that time, many new developments have resulted in changing the system to better service the members. Those new developments include SB 558, the cancer presumptive bill, AB 1817 affecting disability retirement, AB2841 increasing employer contributions, and AB1937 increasing retirement allowances. Using Orange County as an example, these developments are analysed according to their affects upon employees. The significance of these developments for employers and employees of all companies is to encourage the appropriate action necessary to implement change in a positive way for all members of a retirement scheme.

The Kinder Cut: A Macro Communication Strategy for Delivering News of Job Termination

A Voluntary Retirement Scheme (VRS) ought to be good news for employees; it gives them the freedom to retire early with a substantial sum of money, tax free, as compensation. But, in many Indian companies, VRS is retrenchment through the backdoor. Employees identified as redundant or undesirable are pressured to leave. That they have been ‘selected’ for VRS can be devastating news for them especially when finding alternative jobs with similar remuneration and social status is difficult. This paper explores the communication strategies that employers can adopt to deliver well the bad news of job loss. Researchers have been studying the role of communication in softening the blow of job termination. Their discussions tend to be around micro communication strategies that depend largely on the verbal component of the complex communication process. This paper illustrates and recommends a macro communication strategy that would: actively deploy several mutually reinforcing non-verbal as well as verbal moves, especially a range of management actions that work down employee expectations help employees perceive as fair both the company's decision to downsize and the manner of downsizing. A review of several studies of perceived fairness prompts one to conclude that perception of distributive, procedural, and interactional justice helps people accept a variety of unpleasant experiences without anger. If they perceive procedural and interactional justice, they may even overlook low distributive justice. This paper identifies employee expectations that have to be met or worked down by organizations to facilitate the perception of fairness in their job termination. These include: absence of viable alternatives to downsizing adequacy of notice of termination objectivity and transparency in selecting employees to be terminated humaneness in the way the downsizees are treated. As culture and tradition largely determine the scope of some of these and similar expectations, this paper touches upon what Indian employees expect in the event of downsizing. This analysis is followed by a brief discussion of the way three Indian companies of different sizes – Pennar Industries Limited, Pennar Investor Services Private Limited, and Everest Limited – downsized. In the first two cases there was no litigation, violence or strike although the compensation paid was well below the employees' original demand. In the third case there was litigation although an attractive compensation was offered to employees opting for VRS. The first two used a macro communication strategy that conveyed convincingly to the survivors and downsizees alike that the decision to downsize was unavoidable the low compensation offered was fair under the given circumstances the company was treating the downsizees humanely. The third company relied largely on a micro communication strategy driven by logic and data; it did achieve its target of personnel reduction but failed to convince the employees of its fairness.

Social security reforms in China: issues and prospects

The phenomenal success of China's market‐oriented economic reforms since the 1980s has rendered the traditional employment‐based social security system increasingly inadequate and inefficient. For decades, the Chinese government has been trying to develop a more pluralistic, effective and affordable social security system which will be compatible with both a thriving market economy and a flagging socialist political structure. While the emerging system is still struggling with a variety of operational problems, the entry of China into the WTO is looming as a formidable challenge to this social security system. This presentation outlines the recent reforms of the social security system undertaken by the Chinese government, and assesses the effectiveness of the results in meeting the challenge. Here, social security reforms focus on the retirement and unemployment insurance schemes and the social assistance program.