Welfare Reform on the Web (June 2006): Pensions - overseas

Actuarial forecasts for the new national pension scheme in the Dominican Republic

H. Perez Montas

International Social Security Review, vol.59, Apr.-June 2006, p.105-116

The Dominican Republic introduced a new state pension scheme based on individual savings accounts in 2003, replacing a pay-as-you-go defined benefit scheme run by the Dominican Institute of Social Insurance. Under the new scheme, 5% of salaries are paid into individual savings accounts in the first year, rising to 8% in the fifth year of operation. Workers become eligible for a pension on reaching 60 years of age, with a minimum of 30 years of contributions. In an economy characterised by temporary or seasonal work, the requirement of 30 years of contributions is feasible only for workers in the formal sector of the economy; as a result, most workers qualify only for the minimum pension. The new system was implemented a few months before a crisis hit the financial and banking sector which had a serious impact on the national economy, generating hyperinflation and unemployment.

The political economy of pension reform in Russia: why partial privatization?

J. B. Williamson, S.A. Howling, and M.L. Maroto

Journal of Aging Studies, vol.20, 2006, p.165-175

This paper describes Russia’s old age pension system prior to the collapse of the Soviet Union and outlines the new scheme currently being implemented. This is based on the three-pillar World Bank model and consists of 1) a government-funded pay-as-you-go (PAYG) basic pillar; 2) a second pillar made up of an unfunded defined contribution element combined with a funded defined contribution component both financed by mandatory insurance contributions; and 3) a voluntary supplementary insurance pillar. The authors go on to explore why Russia adopted a model for pension provision promoted by the World Bank.. Reasons include economic pressure from international financial institutions, the influence of a network of neo-liberal economists and pensions experts associated with the World Bank, and the need for Russia to gain legitimacy in world society.