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The Korean Pension System at a Crossroads

Autor: Banco Mundial
Año: 2000
Resumen: Old age income security in Korea is at a crossroads. The traditional system of family support is giving way to formal retirement savings--most of it mandated by government. Government employees and private school teachers are obliged to participate in special occupational schemes that operate on a pay-as-you-go basis while private sector workers must contribute to the partially funded National Pension Scheme (NPS). Employers must provide retirement allowances, a retirement cum severance payment program whose obligations are largely unfunded. These schemes have evolved over several decades and are not based on clear targets for the level of mandated retirement income or sustainable payroll tax burdens. They currently pay benefits to a minority of older Koreans. This means that over the next few years only social assistance programs will have a significant impact on the incomes of the current elderly poor. This report presents several alternative reform options. These include reforms to some elements of the existing system as well as an integrated or systemic reform option. The proposed reform allows younger workers to opt out of the earnings-related portion of the NPS. The combination of a mandatory private pension scheme--which would replace retirement allowances--and a reduced public pension scheme would result in a reasonable replacement rate target. New entrants would be obliged to join this system while older workers would continue to be covered by the current scheme.

Fuente: Banco Mundial
Clasificación: Seguridad Social y Sistemas de Pensiones
Tipo de Publicación: Libros
Idioma:

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Nicaragua: Pension Reform Proposal

Autor: Banco Mundial
Año: 2000
Resumen: The study reviews the current social security system, and its characteristics, analyzing the shortcomings of the Old Age, Disability and Survivor's Insurance (IVM) system, based on a defined benefit Pay-as-you-go (PAYG) scheme, no longer viable, given its low payroll taxes, overly generous benefits, and high rates of evasion, all systemic problems, which combined with institutional, and administrative weaknesses of the Instituto Nicaraguense de Seguridad Social (INSS), caused a cash deficit since 1997, and depletion of its reserves for the immediate future. The report explores long term finances, and the rationale for undertaking a systemic reform with mandatory, and defined contributions, based on individual capitalization accounts. It recommends closing the current PAYG system to new entrants, with the proviso for those aged 45-50, to opt for the new system, granting recognition for their acquired rights. General revenues, payroll taxes, and pension fund reserves, or other possible sources, should finance the transition to the new scheme, to be administered by pension fund managers. Funds should be invested both domestically, and abroad, ensuring diversification of the portfolio, as well as protection from local economic, and political manipulation.

Fuente: Banco Mundial
Clasificación: Reformas de Pensiones
Tipo de Publicación: Informes
Idioma:

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Dividing the Spoils: Pensions, Privatization, and Reform in Russia's Transition

Autor: Kapstein, Ethan B.; Milanovic, Branko
Año: 2000
Resumen: Resumen: The authors present a political economy model in which policy is the outcome of an interaction between three actors: government (G), managers and workers (W), and transfer recipients (P). The government's objective is to stay in power, for which it needs the support of either P or W. It can choose slow privatization with little asset stripping and significant taxation, thus protecting the fiscal base out of which it pays pensioners relatively well (as in Poland). Or it can give away assets and tax exemptions to managers and workers, who then bankroll it and deliver the vote, but it thereby loses taxes and pays little to pensioners (as in Russia). The authors apply this model to Russia for the period 1992-96. An empirical analysis of electoral behavior in the 1996 presidential election shows that the likelihood of someone voting for Yeltsin did not depend on that person's socioeconomic group per se. Those who tended to vote for Yeltsin were richer, younger, and better educated and had more favorable expectations for the future. Entrepreneurs, who had more of these characteristics, tended to vote for Yeltsin as a result, while pensioners, who had almost none, tended to vote against Yeltsin. Unlike Poland, Russia failed to create pluralist politics in the early years of the transition, so no effective counterbalance emerged to offset managerial rent-seeking and the state was easily captured by well-organized industrial interests. The political elite were reelected because industrial interests bankrolled their campaign in return for promises that government largesse would continue to flow. Russia shows vividly how political economy affects policymaking, because of how openly and flagrantly government granted favors in return for electoral support. Bur special interests, venal bureaucrats, and the exchange of favors tend to be the rule, not the exemption, elsewhere as well.

Fuente: Banco Mundial
Clasificación: Reformas de Pensiones
Tipo de Publicación: Documentos de Trabajo
Idioma:

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Transferring Contributions to Individual Pension Accounts

Autor: Banco Mundial
Año: 2000
Resumen: Collecting contributions is more complicated in a decentralized pension system, based on individual accounts, than in a public system. Many public plans provide a defined benefit pension based on only a few years' earnings, which limits the need for keeping records of people's earnings and contributions in every year of their working life. And there is usually a choice of pension fund manager with individual accounts. Collection, record-keeping and transferring contributions to individual accounts has often proved problematic. Some reforms have been delayed or abandoned because of collection problems. Using a series of case studies of Latin American and European countries, this briefing highlights policy choices in operating individual accounts systems.

Fuente: Banco Mundial
Clasificación: Ahorro Previsional
Tipo de Publicación: Informes
Idioma:

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Personal Pension Plans and Stock Market Volatility

Autor: Alier, Max; Vittas, Dimitri.
Año: 2000
Resumen: One of the strongest objections to personal pension plans is that they transfer investment risk to individual workers, who are then exposed to the vagaries of equity and bond markets. Using historical United States data, the authors investigate the impact of the volatility of investment returns on replacement rates in the context of personal pension plans. They find large fluctuations in replacement rates across different cohorts of workers, if undiversified portfolios are used. They then explore a number of simple financial strategies for coping with this problem, including: a) portfolio diversification; b) a late, gradual shift to bonds; c) a gradual purchase of nominal or real annuities; d) a purchase of variable annuities. The first three strategies lower the volatility of replacement rates, but at significant cost in terms of lower replacement rates. The purchase of variable annuities reduces the dispersion of replacement rates across generations without lowering their level - because of the persistence of the equity premium and the fact that the volatility of equity returns is lower, the longer the holding period. Sophisticated financial engineering promises more efficient solutions to this problem, but it may not be feasible to apply it in developing countries (or in developing financial markets). Neither authors' approach nor the more sophisticated financial engineering solutions would be able to deal effectively with persistent deviations of investment returns from long trends. But the authors' findings suggest that overconcern about the impact on replacement rates of short-term volatility in stock markets may not be warranted.

Fuente: Banco Mundial
Clasificación: Fondos de Inversión
Tipo de Publicación: Documentos de Trabajo
Idioma:

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