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

The differential impact of social pension income on household poverty alleviation in three South African ethnic groups

M. Ferreira

Ageing and Society, vol.26, 2006, p.337-354

In South Africa those eligible for the state pension (women over 60 and men over 65) are paid a non-contributory, means-tested older person’s grant. The means test is based on the income of an individual beneficiary, and, if married, that of the partner, but not on the income of other household members. Survey evidence reveals the differential impact of South Africa’s social pension payments on the financial situation of three groups of the population with differing levels of inherited socio-economic disadvantage, rural-black households, urban-black households and urban-coloured households. The most disadvantaged households are rural-blacks with urban-coloureds being the least disadvantaged and urban-blacks in between. The impact of pension income on poverty alleviation has a similar pattern.

Do different welfare states engender different policy preferences? Opinions on pension reforms in Eastern and Western Europe

K. Velladics, K. Henkens and H.P. Van Dalen

Ageing and Society, vol.26, 2006, p.475-496

This article addresses the question of whether the differing welfare regimes in old and new EU member states have produced different policy preferences for coping with demographic ageing among their populations. Results show that, despite the different social economic and political backgrounds of old and new member states, there are commonalities in people’s value orientations and attitudes towards population ageing. Most people are pessimistic about the consequences of demographic ageing. The most favoured policy responses are to extend working life and raise taxes. There was no support for reducing pensions in either the old nor the new member states.

The global pension crisis: from gray capitalism to responsible accumulation

R. Blackburn

Politics and Society, vol.43, 2006, p.135-186

Retirement pensions should total 12 to 14 per cent of gross domestic product if older people’s relative incomes are to be maintained. Raising such a sum solely from payroll taxes would generate high levels of unemployment. This article presents an alternative scheme which would see capital redistributed to a regional network of social funds by requiring companies to issue shares equivalent to 10% of their profits annually to those funds. The social funds would not sell their shares but would keep them to generate income for future pensions.

The payout stage in Chile: who annuitizes and why?

E. James, G. Martinez and A. Iglesias

Journal of Pension Economics and Finance, vol.5, 2006, p.121-154

In 1981 Chile adopted a new multi-pillar pension system which featured privately managed individual accounts. Starting in 1983 payouts from the accounts were permitted and detailed rules governing them were put in place. Retirees in Chile have a choice between early versus normal retirement (before or after age 65 for men and 60 for women) and between annuitization versus programmed withdrawals from their funds. Almost two-thirds of retired people have annuitized. Evidence suggests that this high rate of annuitization is explained by the incentives and constraints imposed by guarantees and regulations, as well as competition in the insurance market. Workers with small accumulations of funds in their accounts retire at the normal age and take programmed withdrawal pensions, receiving insurance through the public minimum pension guarantee. The majority of workers retire early and 85% of them purchase annuities, which is the only source of meaningful investment and longevity insurance available to them. As a result a booming life insurance industry, specialising in annuities has developed from scratch.

Resocializing capital: putting pension savings in the service of “financial pluralism“?

E. Engelen

Politics and Society, vol.43, 2006, p.187-218

Households, small and medium-sized enterprises and non-standard economic activities all have increasing difficulties in raising capital. The author proposes a mandatory levy on the surpluses of mainstream pension funds. The sums generated by such a levy could be allocated to capital-poor households and activities via a “Fund for Economic Renewal”.

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