The Effect of an Instantaneous Dependency Rate on the Social Equitability of Hybrid PAYG Public Pension Schemes

2019 ◽  
Author(s):  
Lorenzo Torricelli
Keyword(s):  
Public Pension ◽  
Pension Schemes ◽  
The Social ◽  
Dependency Rate

The effect of an instantaneous dependency rate on the social equitability of hybrid PAYG public pension schemes

2020 ◽  
pp. 1-20
Author(s):  
Lorenzo Torricelli
Keyword(s):  
Convex Combination ◽  
Rate Of Change ◽  
Public Pension ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Dc System ◽  
The Social ◽  
Intergenerational Fairness ◽  
Rate Processes ◽  
Dependency Rate

Abstract The defined convex combination (DCC) pay-as-you-go public pension systems recently introduced in the literature are a form of hybridization between defined benefit (DB) and defined contribution (DC) designed to maintain intergenerational social equitability by reacting to demographic shocks in an optimal way. In this paper, we augment DCC schemes with the assumption that the dependency ratio between pensioners and workers is driven by an exogenously modelled instantaneous stochastic rate of change. This assumption enjoys support from the empirical data and allows explicit solutions for the contribution and replacement rate processes which make transparent the nature of the dynamic evolution of a DCC system, as well as the role of the variables involved. The analysis of intergenerational social equitability measures under the assumption of an instantaneous dependency rate confirms the view expressed in previous literature that neither DB nor DC achieves social fairness, and that DCC plans have the potential to improve on both. We perform a calibration test, and our findings seem to indicate that in ageing economies the DC system might indeed be superior to the DB one in terms of intergenerational fairness.

scholarly journals Recognising Unpaid Care in Private Pension Schemes

2016 ◽  
Vol 16 (4) ◽  
pp. 517-534 ◽  
Author(s):  
Myra Hamilton ◽  
Cathy Thomson
Keyword(s):  
Oecd Countries ◽  
Public Pension ◽  
Private Pension ◽  
Design Features ◽  
Private Pensions ◽  
Unpaid Care ◽  
Pension Schemes

Parents and carers often have interrupted workforce histories, causing gaps in their pension contributions and hence significantly lower retirement incomes. In some countries, to ameliorate these inequalities, carer credits have been introduced to maintain public pension contributions during periods of workforce absence. But improvements to credits in public schemes have taken place alongside a shift to private pensions that widens inequalities for carers. Introducing carer credits to private pensions is one method of addressing these inequalities. A search for examples of credits to private schemes in OECD countries revealed that, at present, they are rare and limited. This article sets out the design features and principles that should underpin carer credits to private pensions.

Evaluating the impact on saving of tax-favored retirement plans

2013 ◽  
Vol 13 (1) ◽  
pp. 62-87 ◽  
Author(s):  
MONICA PAIELLA ◽  
ANDREA TISENO
Keyword(s):  
Pension Fund ◽  
Pension Funds ◽  
Retirement Plans ◽  
Household Saving ◽  
Pension Schemes ◽  
The Social ◽  
Recent Reform ◽  
The Impact ◽  
Retirement Wealth

AbstractThis paper exploits a recent reform of private pension schemes in Italy to identify the impact on household saving of tax-favored retirement saving plans. The reform was part of the restructuring of the social security system and was aimed at rising private long-term saving by making pension funds more attractive and convenient. We control for unobserved saver heterogeneity and a central focus is on substitution across saving instruments. We find that the pension fund legislation had a strong effect on the allocation of saving and triggered substantial substitution of non-tax-favored non-retirement wealth for tax-favored pension funds. In contrast, we find that it had little, if any effect on household saving flows. Our findings also suggest that the provision of ‘closed’ pension funds might significantly affect the decision to invest in private retirement schemes.

Altersrenten und sozialer Ausgleich in Deutschland und Österreich – ein Vergleich anhand von Modellrechnungen

2021 ◽  
Vol 70 (99) ◽  
pp. 2-25
Author(s):  
Florian Blank ◽  
Erik Türk
Keyword(s):  
Old Age ◽  
Early Retirement ◽  
Ideal Type ◽  
Public Pension ◽  
Pension Insurance ◽  
Model Calculations ◽  
Pension Schemes ◽  
Old Age Pensions ◽  
Life Courses ◽  
Stable Employment

Die Gegenüberstellung der Rentenansprüche für einheitliche, idealtypische Biografien ermöglicht den Vergleich von Unterschieden der Rentensysteme selbst. Die von der OECD erstellten Modellbiografien mit durchgehenden Erwerbsverläufen, abschlagsfreiem Renteneintritt und stabilen Einkommenspositionen bilden den Ausgangspunkt für den Vergleich der Rentenversicherungen Deutschlands und Österreichs. Die Vorgehensweise der OECD wird dargestellt, sofern erforderlich korrigiert, aktualisiert und weiterentwickelt. Zusätzlich werden Arbeitslosigkeit, vorzeitiger Renteneintritt sowie Kindererziehungszeiten berücksichtigt. Durch diese Ergänzungen werden eine höhere Realitätsanbindung erreicht und Elemente des sozialen Ausgleichs einbezogen. Es zeigt sich, dass die österreichische Pensionsversicherung in jeder Konstellation deutlich höhere Leistungen gewährt, die Elemente des sozialen Ausgleichs den Abstand teils vergrößern, teils verringern. Abstract: Old-age Pensions and Social Equalization in Germany and Austria – a Comparison Using Model Calculations A comparison of pension entitlements based on ideal-type biographies allows for an identification of differences between pensions systems. We compare public pension schemes in Germany and Austria, starting with the OECD’s model biographies. These biographies are signified by stable employment careers and income positions, and regular retirement without deductions. The OECD’s approach is discussed, revised, updated, and amended. Periods of unemployment and childcare and early retirement are included. This leads to more realistic life courses and means an inclusion of redistributive measures. The Austrian pension insurance delivers higher benefits in every constellation discussed; redistributive elements partly increase, partly reduce differences.

scholarly journals PENSION REFORM - GOALS AND ESTIMATED RESULTS

2021 ◽  
Vol 16 (1(21)) ◽  
pp. 45-61
Author(s):  
Lasha Beridze ◽  
Giorgi Abuselidze
Keyword(s):  
Developing Countries ◽  
Financial Markets ◽  
Pension System ◽  
Pension Reform ◽  
The State ◽  
National Currency ◽  
Replacement Rate ◽  
Pension Systems ◽  
Pension Schemes ◽  
The Social

The existence of pension schemes does not count for a long period, but its obligation has been historically proven, as the experience of countries has shown that the countries that have the best practices provide better social protection of the population when retiring. The article discusses the redistribution of pension assets worldwide, pragmatically and theoretically evaluating the pros and cons of retirement plans. The implementation of the pension reform in Georgia has been delayed many times due to the socio-economic situation, accompanied by the psychological attitude of the population towards distrust of the state. Georgia is on the path to European integration, where one of the most important requirements is the proper protection and social equalization of the socially vulnerable, while the existence of pension schemes ensures the accumulation of large amounts of funds, which can play an important role in capital and financial markets. The advantages of the existence of pension schemes may be reflected in the permanent increase of the equalization ratio, but it should be noted that at such times the macroeconomic indicators of the state should be relatively stable, such as inflation, stability of the national currency and others. As of today, the tasks set before the Pension Agency in Georgia are quite ambitious and require effective management, as the pension reform takes only a few years.In the social security system of the population, the pension is a mechanism for maintaining a stable material condition during the period of disability. Following in the footsteps of the development of mankind, pension systems were improved, the main purpose of which was to replace the average income per capita during the working period in a way that would not worsen living conditions. Therefore, the pension replacement rate has become a measure of the evaluation of the pension system of a country. The replacement rate in the pension systems of developed countries is in the range of 60-80%, in developing countries it is 15-30%, which is systematically subject to adjustment. Georgia, despite the normal rate of economic growth in the last decade, is not distinguished by a pension provision mechanism. From the day of independence, the state basic pension was periodically subject to changes. The change, however, was related not so much to the approach to the subsistence level as to the subsequent promises of a change of government. At the present stage, the pension system is in the process of modification, which aims to ensure adequate pension income, fiscal sustainability of pension expenditures and a more effective response to demographic changes in the population. Developing and developing countries are trying to equalize the time of retirement of the population, which is often difficult to achieve and requires both economic and political decisions, because the financing of social security from the state budget requires large expenditures. Which can often be the result of the devaluation of the national currency and high inflation, which in itself can be seen as an impediment to economic development. The increase in social spending is often the subject of controversy among scientists-economists, for example, for the development of the state, what kind of spending will be more effective, financing social or capital projects ?! Often, the increase in capital expenditures, at the expense of the social situation, is not considered a popular political decision, because at this time the dissatisfaction of the socially vulnerable segments of the population increases. One of the goals of the accumulative pension is to achieve social equality and a high replacement rate, but how much it will work in Georgia is also a question, because the unemployment rate and the self-employed are high in terms of labor force, in particular, about 30% of the labor force The amount of monthly salary that is published statistically is also problematic, because the calculation methodology is often disputed and there is no minimum wage at the level of legislation. The main functions of the Pension Agency are to invest the accumulated funds, but investments in investment assets are not defined by the National Bank and are quite narrow, for example, foreign practice allows pension funds to invest funds in both real assets and foreign financial markets. As mentioned, the implementation of such investments by the Pension Agency should be allowed in Georgia and should be used to finance national, strategic projects. Ensuring the stability of inflation and the national currency in Georgia remains a challenge. In the event of inflation approaching double digits, pension savings will lose effectiveness. Also noteworthy is the gender imbalance when receiving a pension, namely in terms of average salary and life expectancy, a man's salary is about 4 times higher than a woman receiving a pension, which should be considered unfair, the state will have to adjust the retirement age in the future. Finally, it should be noted that the pension reform, despite its shortcomings, should be considered a step forward, but it needs to refine certain issues, diversify asset management and economic stability, which will not be easy to achieve.

scholarly journals Development of service pension policy in Latvia from 1996 until 2016

2018 ◽  
Vol 51 ◽  
pp. 03011
Author(s):  
Inese Upite ◽  
Feliciana Rajevska
Keyword(s):  
Social Insurance ◽  
Pension System ◽  
Pension Scheme ◽  
Policy Planning ◽  
Pension Policy ◽  
State Budget ◽  
Pension Schemes ◽  
Social Pension ◽  
The Social ◽  
The Government

The government made a decision to terminate the development of the service pension in 1997. However, during 1998–2016 the scope of service pension beneficiaries was extended. Thereby along with the overall social insurance pension system, the social pension scheme has been established and developed for a certain range of people funded by the state budget – the system of the service pension. The aim of the article is to explore the development of the service pension policy during 1996–2016. To accomplish it, in the framework of the study concepts related to the service pensions and the tendencies of reformation of the service pension schemes were studied. The international practice and the experience of several countries were explored, as well as the analysis of legal acts, policy planning papers and statistics was performed. The purpose of the service pension has changed and diversified, moreover, the issues regarding the service pension coverage are promoted by a group of politicians, escaping a wider discussion in public and even in the government.

Demographic and Social Challenges in the Design of Public Pension Schemes

2020 ◽  
pp. 33-55
Author(s):  
Estefanía Alaminos ◽  
Mercedes Ayuso ◽  
Montserrat Guillen
Keyword(s):  
Public Pension ◽  
Social Challenges ◽  
Pension Schemes
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