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Welfare Reform on the Web (April 2004): Pensions - Overseas

EMPLOYEES' CHOICE OF SUPERANNUATION PLAN: EFFECTS OF RISK TRANSFER COSTS

K. Brown and others

The Journal of Industrial Relations, Vol. 46, 2004, p.1-20

Over the past two decades there has been a definite shift away from defined benefit pension plans to accumulation plans. In 1998 the Superannuation Scheme for Australian Universities (SSAU) gave its members the opportunity to transfer from the defined benefit pension to an accumulation-style plan. The article explores why only a third of members chose to transfer. Results show that although those who transferred were prepared to accept trade-offs in their choice, the majority were prepared to forego a higher quantum of expected benefits for greater security. The article concludes that a greater transparency of risk transfer costs, as well as incorporating compensation for such costs, is needed if the scheme is to be a success.

REFORMING PENSIONS IN EUROPE: EVOLUTION OF PENSION FINANCING AND SOURCES OF RETIREMENT INCOME

G. Hughes and J. Stewart

Cheltenham: Edward Elgar Publishing, 2004

Since the early 1990s the countries of the European Union and Central Europe have been involved in the process of reforming their retirement income systems. The principal objective of these reforms is to contain the pay-as-you-go public pensions in the face of aging populations. Many of the reforms involve greater reliance on personal saving and development of capital markets to fund private pension arrangements. The contributors demonstrate the complexity of pension provision and highlight the dangers of focusing on one model. They also argue that the recent reforms in Europe may have the effect of reducing the incomes of future pensioners while exposing them to uninsurable risks associated with private pensions.

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