Sustainability Of Pension System Research Articles

Policy interplay among social health insurance system, pension system, delayed retirement initiative and implications for the self-rated health status of older workers.

Delayed retirement initiative proposed in China attaches greater importance to the sustainability of pension systems and the labour shortage, but less to the health status of older people. The existing social health insurance and pension system are not well established to match this initiative. This study investigates the policy mix of delayed retirement, employment-based social health insurance, social pension participation for health status of older people. Results of the data from the China Health and Retirement Longitudinal Study (CHARLS-2018) show that late retirement could benefit health status among older adults. Moreover, such effect of late retirement appears more salient for those uninsured by employment-based social health insurance and those still in the pension contribution phase upon reaching the statutory retirement age. Hence, in countries with inadequate health insurance and pension systems, such as China, delayed retirement may serve as an important alternative to social security for the health of older people.

Об’єднання єдиного соціального внеску і податку на доходи фізичних осіб у контексті євроінтеграційних прагнень України

Introduction. The high tax burden on labor is a problem not only for Ukraine, but also for many European countries, negatively affecting the labor market, in particular, it is considered one of the reasons for relatively high unemployment and informal employment. In Ukraine, it is proposed to solve this problem by consolidation the unified social contribution(hereinafter-USC) and personal income tax( hereinafter-PIT)(in fact, by abolishing the unified social contribution). Problem Statement. Despite the fact that the implementation of this proposal is associated with serious fiscal and social risks, it has not been the subject of scientific debate, although it was first published in Ukrainian periodicals in 2018-2020. Purpose. To assess the abolition of the unified social contribution in the context of compliance of such a transformation with European guarantees of adequate social protection and the European social model in general. Methods. The methods used are comparative and statistical analysis, abstract logic, analogies and theoretical generalization. Results. It has been established that, unlike the proposal to consolidate USC and PIT in Ukraine, the implementation of which will lead to a decrease in the living standards of people who have already retired and will receive a minimum income from the state budget, which will be able to protect them only from absolute poverty, and reliance on future pensioners-participants of private pension funds of all risks related to their provision after termination of employment, principle 15 of the European Pillar of Social Rights emphasizes the right of older persons to adequate pensions and a dignified old age. The importance of achieving this goal is evidenced by the fact that every three years, the European Commission publishes a report that reviews the current and future adequacy of old-age incomes in EU member states in three dimensions – poverty prevention, ability to replace income received before retirement and retirement duration – and analyzes key reforms aimed at ensuring the financial sustainability of pension systems. Such reforms are carried out in two main areas: revision of social contribution rates and expansion of financing from general government revenues, in particular, property, consumption, and environmental taxes. Conclusions. It has been found out that the abolition of USC as a stable source of financing the social insurance system in Ukraine will result in either its erosion or complete dismantling of the welfare state. This may complicate our movement towards the EU due to the inconsistency of Ukrainian approaches to solving social problems with European ones.

Proposal for calculating regulatory capital requirements for reverse mortgages

In the current context in which many people worry about the sustainability of pension systems, reverse mortgages are gaining popularity because they are a way to supplement elderly people's incomes. However, it is necessary to provide banks with an adequate risk measurement and management procedure for reverse mortgages to increase the commercialization of these products, which will result in greater well-being for the retirement age population. In this paper, we propose a method to measure risk and estimate the regulatory capital requirements for a portfolio of reverse mortgages owned by a financial institution according to Basel II and III. The method considers house price risk, mortality risk and interest rate risk; consequently, regulatory capital requirements need to be computed using a Monte Carlo simulation procedure. The proposed method is general and can accommodate several scenarios for reverse mortgage specifications, including fixed or variable mortgage rates and different income stream schemes (with the lump sum as a particular case). The results for the U.K. show that reverse mortgage providers face higher risk when the lender initially advances a higher amount, with the lump-sum case indicating the highest risk, for relatively younger borrowers, the female population, higher interest rates and floating mortgage rates.

Priming or learning? The influence of pension policy information on individual preferences in Germany, Spain and the United States

A promising approach to pension policy preferences focuses on the influence of policy related information. We advance this research programme by examining the impact of information about future pension benefits, including whether information effects occur through priming, learning or both. Drawing on a novel, split-sample survey experiment in the US, Germany and Spain, we examine the impact of information on forecasted pension replacement rates for 2040 on pension policy attitudes. Findings indicate that the information treatment increases support for the two outcomes considered: (i) increases in the pensionable age and (ii) greater spending on pensions relative to other social programmes. Analyses of heterogeneous treatment effects accounting for prior beliefs of participants show that information effects occur both through priming and learning. The study concludes that hard, non-partisan information increases support for reforms that foster the financial sustainability of pension systems, although the scope of information effects depends on contextual conditions.

Comparison of the Pension Systems between Iceland, Netherland, and Thailand: Lessons for the Pension System Reform of Indonesian Civil Servants

The current implementation of the civil servant (PNS) pension program still has many problems that have a major impact on the adequacy and sustainability of Indonesia's pension system. This study aims to take lessons from a comparison of pension systems in Iceland, Netherland, Thailand, and Indonesia. The results of the discussion provide several recommendations or suggestions for civil servant pension programs which are currently in the process of being reformed. The Indonesian government needs to consider the high transition costs and the performance of pension funds, as happened in Netherland if it wants to change the pension scheme to a defined contribution. Based on this study, the fully funded method that is planned to be implemented does not always reduce the funding burden. Hence, learning from Thailand, civil servant pensioners should consider using a partially funded financing system as an initial step for civil servant pension reform. In addition, the government also needs to consider increasing the minimum retirement age which is determined based on the life expectancy of the Indonesian people. To support this proposal policy (increase the retirement age), so Indonesian government needs also plan programs related to the development of employee skills and competencies. This is very important to keep older employees productive in the workplace or organization.

Пенсионные системы государств Центральной Азии

Orientation towards the formation of the Eurasian socio-economic space implies the coordination of social policy, including in the field of pension provision. The harmonization of pension systems involves an analysis of the conditions for the formation and main parameters, the identification of common features and differences, and the determination of development prospects. The key problems of pension systems in the countries of Central Asia are the limited coverage of working people with pension insurance combined with a low basis for calculating pension contributions. The demographic factor plays a dual role in the functioning of pension systems. The countries of the region are characterized by a low proportion of older populations coupled with high rates of aging. At the present stage this can be seen as a demographic bonus, but in the long term it will become a serious challenge for the sustainability of pension systems. The situation is aggravated by the high migration outflow of the able-bodied population. One of the ways to increase the stability of pension systems can be to increase the role of state pensions – the development of the state system of social protection of pensioners as the main link in the pension system supplemented by private insurance and funded payments.

Measuring Financial Sustainability and Social Adequacy of the Italian NDC Pension System under the COVID-19 Pandemic

The COVID-19 pandemic is presently influencing the financial sustainability and the social adequacy of public pension schemes. In this paper, we measure the effects of COVID-19 on the Italian public pension system by introducing a deterministic shock due to the pandemic in the evolution of the variables mainly involved in the system’s evaluation. These variables, namely the unemployment rate, wage growth rate, inflation rate, and mortality rates, are modeled in a stochastic framework. Our results show that COVID-19 worsens the financial sustainability of the pension system in the short–medium term, while it does not appreciably affect social adequacy in the medium term. The Italian pension system already showed a social adequacy problem before 2020, which the pandemic does not further deteriorate essentially.

Toward a Sustainable Pension System

This article presents a pension plan model aimed at maintaining the resilience of a nation’s social security infrastructure and ensuring retirees’ welfare. The aging population, labor market shifts, legislative changes, and unexpected economic crises (including the COVID-19 pandemic) have created distortions between annuity expenditures and national income. Many countries are experiencing rising life expectancy and in turn increasing public pressure to ensure a dignified existence for the growing elder population. This is challenging decision-makers and government-supervised pension funds to strengthen the financial soundness and solvency, stability, and distributive equity of public and supervised private annuity systems. We present a three-tier pension model that is unique because it is implemented in a small OECD country, and its implementation is flexible and changes according to the country’s demographic and financial changes. The presented model can be used as an example by other countries facing similar problems in their pension systems.

PENSION - ONE OF THE BASIC ELEMENTS OF NATIONAL GOVERNMENT POLICY ON THE PUBLIC SOCIAL SECURITY SYSTEM

The article addresses an essential element of the public social insurance system. Pension is an important dimension in reducing poverty and multidimensional deprivation. It is an approach to thinking about processes, policies and interventions that respond to the economic and social risks and constraints faced by people at risk of livelihoods. At the same time, the actions of the state should allow the minimization of these negative influences by ensuring the operation of a fair and sustainable pension system, which guarantees a decent living for pension beneficiaries.

Comparison of the World’s Best Pension Systems: The Lesson for Indonesia

Iceland and the Netherlands presently have the best pension systems in the world, according to the Mercer CFA Institute Global Pension Index 2021. In the meantime, Indonesia ranked 35th. This study compares and analyzes Iceland’s and the Netherlands’ current pension systems as the finest in the world, as well as the future threats to their pension systems, and applies the lessons learned from both nations to Indonesia, which intends to alter its public pension system. According to a comparative analysis of Iceland, the Netherlands, and Indonesia, the overall pension systems of Iceland and the Netherlands are advantageous for ensuring adequacy and sustainability of the pension system. However, Iceland and the Netherlands may suffer adequacy and sustainability issues in the long run. As a result, they should continue to evaluate their own countries’ present structures, notably in demographics. Concerning the Indonesia pension system, Indonesia policymakers should consider enforcing the social security system, since these systems have enabled Iceland and the Netherlands to have lower poverty rates. Furthermore, the Indonesian government should strengthen the existing PAYG and DB pension systems, raise the minimum pension eligibility age, contribute to the system regularly, and apply the cost-of-living adjustments to improve the adequacy and sustainability of the civil service pension system. Simultaneously, civil servants should contribute more to ensure the long-term viability of this pension system. The Indonesian government should implement such adjustments, as they would enhance budgetary sustainability in the long run.

The Logical Sustainability Theory for pension systems: the discrete-time model in a stochastic framework under variable mortality

Abstract The aim of this work is to provide the logical sustainability model for defined contribution pension systems (see [1], [2]) in the discrete framework under stochastic financial rate of the pension system fund and stochastic productivity of the active participants. In addition, the model is developed in the assumption of variable mortality tables. Under these assumptions, the evolution equations of the fundamental state variables, the pension liability and the fund, are provided. In this very general discrete framework, the necessary and sufficient condition of the pension system sustainability, and all the other basic results of the logical sustainability theory, are proved. In addition, in this work new results on the efficiency of the rule for the stabilization over time of the level of the unfunded pension liability with respect to wages, level that is defined as β indicator, are also proved.

URGENCY OF PENSION REFORM IN GEORGIA

The article discusses the urgency of pension reform in Georgia. The disadvantage of the existing pension model was its pressure on the state budget. At the same time, the recent demographical changes in Georgia revealed new challenges and put at risk the sustainability of the future state pension system; The previous pension system in Georgia would not have provided the old aged citizens with so called “Decent pension” that’s why there was an emergency of a new reformation. It is worth mentioning, that global aging is the history of world success. Nowadays people live longer. This is the triumph of social health security, shown up by establishing healthy life style, pharmaceutical market, generally citizens’ social-economic conditions and economic promotion as well. Aging process affects economic increase, formal and non-formal supporting system and mobilization of supporting resources for elderly citizens from the Government’s side. Nations should admit the global context of the problem, realize new demographic reality; However making some corrections in pension policy might be painful for elderly groups. Key words: Relevance of reformation, demographic changes, active aging, budget pressure, usefulness of the reform , rate replacement, accumulating pension system, pension indexation.

Justifying a financially and socially sustainable pension reform: a comparative study of Finland and France

PurposeIncreasing longevity and lower birth rates put pressure on the sustainability of pension systems. This compels countries to reform pension schemes. Different countries opt for different types of reforms. This article examines the scope of possibilities for a pension reform in two countries with distinct institutional and ideational setup: Finland and France.Design/methodology/approachThe authors utilise the framework of different modes of justification presented by Boltanski and Thévenot to reveal the reasoning used in pension reform discussions in both countries. The authors study expert reports to analyse how nationally constructed ideas and local institutions frame and shape the different logics and justifications.FindingsIn Finland, the approach to pensions is dominated by industrial and market justifications. The pension system is institutionally separated into two different blocks: one addressing poverty and the other income maintenance. The separation enables the prevalence of these logics and makes it easier to promote reforms that emphasize efficiency and individual responsibility instead of income distribution. The French report is concentrated around civic and domestic dominated justifications by stressing solidarity and the role of pension systems connecting individuals and generations together. Any reform needs to consider these issues.Originality/valueThe article uses a novel research design to study pension reform processes. The article distinguishes the roles that ideas and institutions have in shaping expert reasoning and reform options. The authors show how ideas and institutions form a mutually reinforcing loop which helps to explain path-dependency in pension systems.

Exploring behavioral barriers and interventions in retirement savings: Findings from online focus groups among university students

In a number of countries around the world, population ageing raises concerns about the sustainability of pension systems. A younger generation has conventionally been least likely to save for retirement even if there is a need to take individual responsibility and start saving for their retirement as soon as possible. In this context, the aim of the paper is to identify behavioral barriers and interventions towards retirement savings ceiling to this part of the productive population. For this purpose, three online focus groups were deployed among 16 university students aged 23-24 years. Using the coding process, common categories, related codes and frequencies of responses were determined from the transcribed material. The results pointed at two crucial barriers related to retirement savings: behavioral (present bias, status quo bias, loss aversion, limited attention) and institutional (education, pension policy and trustworthiness of the state institutions). Additionally, three main categories of behavioral interventions were detected to overcome these barriers: simplification of decision-making (easy calculation of pension, default options), use of salience effects (information campaigns, visualization tools, personalized content) and minimizing feelings of loss (framing of messages, financial incentives, products with different types of liquidity). Based on findings, recommendations were formulated for three groups of stakeholders: government, industry (financial providers and pension funds) and employers. The results bring valuable insights to relevant stakeholders regarding behaviors and attitudes of the young generation on retirement savings issues. AcknowledgmentsThis contribution was written with the support of the Technology Agency of the Czech Republic, project number TL03000737 titled as “Behavioral economics as a population activation targeted tool within use of financial security banking products.”

Sustainability assessment of pension systems of new EU member states using data envelopment analysis with sensitivity and cross-efficiency analysis

This paper assesses the sustainability of pension systems of New Member States of the European Union that have undergone the transition to a market economy and the establishment of a multi-pillar pension model. Investigating pension sustainability from a slightly different perspective, we apply the Mercer CFA Institute Global Pension Index methodology, whose sustainability sub-index measures indicators that have a significant influence on the likelihood that the current pension system will be able to provide benefits into the future. However, this methodology predefines the weights for each indicator, which can be limiting for countries that have large oscillations between indicators. To obtain a sustainability analysis without predefined weights, we apply data envelopment analysis (DEA) to calculate efficiency scores using sustainability indicators as inputs. Furthermore, since DEA generally allows each country to load on their strong indicators as much as possible, allowing thus for self-appraisal, we perform the analysis of the perturbations in the data and examine how these changes affect the overall relative positions of the countries in the set. Also, we explore the cross-efficiency approach to define peer-appraisal as a more objective efficiency score. As a final step, a comparison of all EU Member States provides an overall perspective.

Adequacy, Affordability and Sustainability of Pensions in Higher Learning Institutions in Zambia

Old-age poverty is as old as the human race, yet to this day, the fight against this beast rages. The fight against old-age poverty is certain, and so is the need to provide retirement income. The stakeholders of the University of Zambia (UNZA), Copperbelt University (CBU) and Mulungushi University (MU), particularly the government, expressed sustainability and affordability concerns over the existing pension systems in the three public universities. Eventually, the government directed the institutions to undertake pension reform to abolish second pillar plans. The study aimed to evaluate the adequacy, affordability and sustainability of pension systems at UNZA, CBU and MU. The study adopted a quantitative approach in which adequacy, affordability and sustainability indicators of the pension system were assessed considering data recorded within the last ten years. Survey questionnaires were used to gather data from 360 respondents. Data were analysed using SPSS Pearson correlations to evaluate the relationships between variables and sensitivity analysis techniques. Quantitative information was gathered from the financial statements of the universities over a ten-year horizon. The results indicate that the pension systems are adequate at the Zambian HDI of 64 but inadequate at the Sub-Saharan HDI of 69. On the other hand, affordability and sustainability performance indicators highlighted the financial stress the existing pension systems exert on the financial position of the three institutions. The pension liabilities grew by an annual average of 41% for UNZA, 19% for CBU and 35% for MU. In addition, the gearing ratios stood at 265% for UNZA, 248% CBU and 81% MU. Pension liabilities expressed as a proportion of current assets; the ratios stood at 841% for UNZA, 336% for CBU and 25% for MU. The liquidity indicators demonstrate the financial challenges the universities face in paying retirees. The sensitivity analysis of the financial information projects continued growth of pension liabilities resulting in further delayed liquidation of pension benefits. Therefore, the study projects increased old-age poverty, which is detrimental to the performance and reputation of the higher learning institutions in Zambia. With the poor performance of key pension indicators, the public universities face the daunting task of reforming the existing models to fight old-age poverty. The fight against old-age poverty is a collective responsibility that should endeavour to improve the lives of retirees rather than exacerbate the situation as the directive to reform seems to cause in the public universities. The study recommends design concepts encompassing risk management, prefunding and key pension performance indicators as dictated by actuarial assumptions. Furthermore, the study recommends a pension model that embraces the critical key design principles that make the fight against old-age poverty easier without abandoning the financing mechanism.

The Impacts of Population Aging on China’s Economy

The Chinese economy had an extraordinary average GDP growth rate of 8.50 percent from 1980 to 2018. However, the implementation of one-child policy in the late 1970s has depressed the total fertility rate to below the replacement rate since 1992. China thus experienced an increasing composition of older populations in the past three decades, which puts pressure on Chinese economic growth and makes its eye-catching economic growth potentially unsustainable. This study develops an overlapping generations (OLG) model to investigate the impacts of this demographic transition in the Chinese economy. This study conducts six policy reform exercises to examine measures that could improve the sustainability of fiscal and pension systems. The simulation results indicate that a mild tax increase on either wage income or consumption does not improve the fiscal stance but creates distortionary effects on saving and consumption behaviors. Of the pension reform measures considered, the combination of extending the mandatory retirement age and cutting the replacement ratio offers the most significant improvement to pension sustainability. However, increasing the contribution rate of the working-age population has the least effect on pension sustainability and a noticeable distortionary effect on the consumption ratio and saving rate.

"Sustainability of private administrated pension funds in Romania "

At the level of the European Union, pensions from redistributive public systems are the main source of income for the elderly. A quarter of the European Union's population is made up of retirees, and their numbers have been steadily rising in recent years. In the last decade, in Romania, the issue of sustainability of the public pension system has become more and more acute and solutions have been sought for the transfer of responsibility for the payment of pensions from the state to the individual through privately administered pensions. In the field of social policy, the constant concern has been to ensure a decent income for the elderly. The paper aims to identify the financial sustainability of private pension systems, the investment strategies used by these funds, the structure of investment portfolios, the profitability achieved by fund managers. The research method used will be statistical-mathematical. The research data are processed based on the reports and data of the Financial Supervisory Authority (ASF), the Private Pension System Supervisory Commission (CSSPP), the Romanian Association of Private Administrative Pensions (APAPR), the National Institute of Statistics (INS) and those from EUROSTAT. The results of this research consist in highlighting the problems of the current private pension management system and the economic developments of the Romanian economy in the coming decades

ТРАНСФОРМАЦИИ ПЕНСИОННЫХ СИСТЕМ В ЕВРОПЕЙСКИХ И ЛАТИНОАМЕРИКАНСКИХ СТРАНАХ

The article observes the evolution of pension policy in European and Latin American countries over the last 25-30 years. The main reason for the profound changes occurred in this area lies in the marked acceleration in population aging, taking place both in the Old and the New World, including Latin America, considered a young region for a long time. The cross-country comparative analysis shows that the main tasks of reforms consist in ensuring the long-term financial sustainability of pension systems, preventing further growth of spending on public pension schemes by raising the retirement age and prolonging the labor activity of senior people. Gradual expansion of population covered by accumulative (funded) pension plans, in addition to distribution component, is another tool. Meanwhile the actual situation demonstrates that the initiatives of some European governments, following the recommendations of international financial institutions, are not always adequately perceived by the society (Spanish and French cases are representative examples). Moreover, it should be pointed out that European experience is actively examined in Latin America during the ongoing reforms to create multi-level national retirement systems, and greater attraction of private entrepreneurial capital for public financing of social security models. A review of the publications of Russian scientists shows that the latest world experience is not ignored in our country, where the task of more reliable social protection of pensioners is on the agenda.

Reality and expectations of old-age pension savings in the pension system of the Slovak Republic

Abstract The aim of the authors is to provide a critical statistical-analytical view of the current pension system of the Slovak Republic with special regard to old -age pension savings in its fifteen-year existence, resulting in proposals for adjustments to its operation. It includes an analysis of the sustainability of pension systems, an analysis of the age distribution of savers as well as possible investment strategies of savers and the distribution of their property savings in pension funds. We model the investment strategy of a participant in old-age pension savings. We draw attention to the evaluation of old -age pension savings in pension funds during its existence and quantify the potential loss caused by an inappropriate investment strategy of savers. The an alysis showed that the Slovak participant in old-age pension savings invests mainly in conservative pension assets, which bring low volatility in the short term, which may not be optimal in the long run. In order to achieve change, we also outline the possibilities of changing the attitudes of savers to value their savings and propose reform steps that would contribute to ensuring a balance between the financial and social sustainability of the pension system.