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Welfare Reform on the Web (June 2011): Pensions - overseas

Can complementary pension plans help improve retirement income in the Dominican Republic?

M. Ayuso and D. Valero

International Social Security Review, vol. 64, no. 2, 2011, p. 65-89

Over the last 20 years many countries in Latin America and the Caribbean have replaced their pay-as-you-go public pension systems with privately managed individual retirement savings accounts. Unfortunately these funds have not generated an adequate retirement income for people covered by them. This article proposes addressing the problem of inadequate returns on individual retirement accounts through the introduction of complementary occupational pension schemes, using the Dominican Republic as a case study.

A comparative analysis of pension reforms and challenges in Ghana and Nigeria

M.W. Kpessa

International Social Security Review, vol. 64, no. 2, 2011, p. 91-109

This article examines the complete and partial shifts to defined contribution public pension systems in Nigeria and Ghana respectively. It concludes that, if the new pension arrangements in Ghana and Nigeria are to meet their objectives of providing adequate retirement benefits, several important issues will need to be addressed, including overly bureaucratic institutional design of the new systems, lack of adequate knowledge about markets and financial instruments, general administrative weakness, and the fragility of national financial markets and the private sector.

Determinants of the generosity of pension plans for public school teachers, 1982-2006

R.L. Clark and L.A. Craig

Pension Economics and Finance, vol. 10, 2011, p. 99-118

This article presents a brief history of the development of teacher pension plans in US states since their establishment in the second half of the nineteenth century. This history helps us to understand the evolution of these plans, including their subsequent changes, among which their merger with plans for other state employees and their interface with Social Security are the most salient. The main story of the past 25 years has been the increased generosity of the plans. Normal retirement ages have been reduced, generosity parameters increased, and the number of years in the salary averaging period have been cut. As a result, replacement rates for an employee with 30 years of service rose by 10% between 1982 and 2006. This history may raise concerns about the sustainability of the current generosity of teacher retirement plans.

A macro-financial analysis of pension system reforms in emerging Europe: the performance of IRAs and policy lessons for Serbia

N. Altiparmakov

International Social Security Review, vol. 64, no.2, 2011, p.23-44

This article investigates the financial feasibility of a partial privatisation of the public pension system in Serbia through the introduction of privately-managed individual retirement accounts (IRAs). Using empirical data for a period close to a decade from emerging European countries that have partially privatised their pension systems, the evidence shows that the returns on privately-managed IRAs have been below the implicit rate of return on public pay-as-you-go systems. High operating costs and undeveloped capital markets are identified as major contributing factors to the failure of privately-managed IRAs to meet reform expectations. In the light of this empirical evidence, Serbia is advised to focus on parametric reforms of the public pay-as-you-go system and treat IRAs as a form of voluntary supplementary retirement provision.

Micro-pensions in India: issues and challenges

S. Shankar and M.G. Asher

International Social Security Review, vol. 64, no.2, 2011, p. 1-21

This article analyses the potential role of micro-pensions in India. The analysis suggests that, because of the heterogeneity of the target population, micro-pension products should be voluntary and portable and permit experimentation in their design and in the delivery of services. Accordingly, decentralised micro-pension schemes that operate within an appropriate regulatory framework and according to sound governance practices are deemed more suitable for the Indian context than centralised schemes with limited flexibility. The article includes two case studies of recently initiated Indian micro-pension schemes. It is concluded that micro-pensions have the potential to be one of the most useful components of India's multi-tiered social security system.

Pension reforms, liquidity constraints and labour supply responses

U. Colombino and others

Pension Economics and Finance, vol. 10, 2011, p. 53-74

Pension reforms are being introduced by the Norwegian government in 2011 which offer individuals incentives to postpone retirement by increasing the pensions of those who stay in employment. The authors construct a simulation model to estimate the impact of the reforms on people's retirement decisions. The model uses Norwegian register data from 1996, which covers all citizens aged 55-68 that year. The results of the simulations suggest that the reforms will significantly reduce the number of men and women choosing retirement.

The portfolio effect of pension reforms: evidence from Italy

R. Bottazzi, T. Jappelli and M. Padua

Pension Economics and Finance, vol. 10, 2011, p. 75-97

In the 1990s, the Italian pension system was changed by a sequence of radical reforms. These reforms raised the retirement age and minimum years of contributions for pension eligibility, and introduced a gradual reduction in pension benefits. This study investigated how changes in expected pension benefits have affected households' portfolio allocations using data from the Italian Survey of Household Income and Wealth. Results show that households have responded to pension cuts mostly by increasing real estate wealth, and that this response is stronger among households more able to accurately estimate future retirement benefits.

The relationship between women's work histories and incomes in later life in the UK, US and West Germany

T. Sefton and others

Journal of European Social Policy, vol.21, 2011, p. 20-36

Using data from several large-scale longitudinal surveys, this article investigates the relationship between work histories and personal incomes (from both public and private sources) of older women in the UK, US and West Germany. The association between work histories and older women's incomes is strongest in Germany and weakest in the UK. In the UK, only predominantly full-time employment is associated with higher retirement incomes, whereas part-time and irregular full-time employment does have a significant and positive association with later life incomes in West Germany, and to a lesser extent, in the US. In addition, there is evidence of a pensions poverty trap in the UK, whereby women who have worked up to 15 years in full-time employment or 30 years or more in predominantly part-time employment do not appear to benefit in pension terms. Work history matters less for widows (in all three countries) and more for recent birth cohorts and more educated women (UK only).

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