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Welfare Reform on the Web (April 2007): Pensions - overseas

Dismantling an earnings-related social pension scheme: Germany's new pension policy

W. Schmähl

Journal of Social Policy, vol. 36, 2007, p. 319-340

The red-green coalition government which came to power in 1998 radically reformed the German pension system. Prior to the reform of 2001, the German social pension insurance scheme linked individual pensions to average net earnings and was financed on a pay-as-you-go basis by social insurance contributions and a federal grant. Capital-funded occupational pensions and private savings were supplementary instruments. The reform of 2001 changed the formula for calculating individual pensions to reduce the benefit level. Employees were given the right to channel some of their salaries into occupational pension schemes through "earnings conversion". Subsidised private saving schemes were made a substitute for social pensions, although officially still labelled as supplementary.

Gender and the devolution of pension risks in the US

A.M. O'Rand and K.M. Shuey

Current Sociology, vol.55, 2007, p.287-304

The current occupational pension environment in the USA is characterised by the rise of defined contribution plans which shift the responsibility for investment of retirement savings in the market away from employers to individual workers. While men and women in this environment face new pension risks, women remain more exposed due to their lower workplace earnings, unstable employment histories and increased risk of divorce and non-remarriage. Unmarried women consistently bear the greatest risk of low pension balances in defined contribution plans and individual retirement accounts. This article examines the relationship between gender, household structure and pension saving in the defined contribution system. Two cohorts from the Panel Study of Income Dynamics are tracked between 1984 and 2001 to estimate the effects of variations in household, employment and employer pension policy on worker pension balances.

Pension reform and age of retirement rules

K. Howse

Ageing Horizons, issue 5, 2006, p. 3-11

Proposals to raise the age of eligibility for retirement pensions have become commonplace in high-income countries. There is general agreement that later retirement and longer working lives are essential components of any sensible strategy to cope with the fiscal and economic challenges of population ageing. This article reviews how pension rules on the age of eligibility for benefits are changing in different parts of the world, and at some of the tensions that exist between the different policy objectives that guide their reform.

Pension reforms in urban China and Hong Kong

W.K. Yu

Aging and Society, vol. 27, 2007, p. 249-268

This paper discusses the causes and main features of the pension reforms in urban China and Hong Kong, and the difficulties faced by governments in implementing these reforms. The discussion shows that the reforms reflect both international competitive pressures and the continuing influence of both earlier welfare arrangements and local economic conditions. The governments have responded both to the challenges of economic globalisation and the legacy of previous policies. Moreover, the effectiveness of the new schemes has been undermined by the need to promote economic growth and by the constraints created by the previous welfare measures.

The political future of social security in aging societies

V. Galasso

London: MIT Press, 2006

As life expectancy continues to rise, the book asks whether the growing number of elderly will be able to rely on publicly provided retirement income for their old age consumption. The expectation is that population aging will substantially undermine the financial sustainability of most European pension systems. The book provides a quantitative comparative analysis of the future political sustainability of social security in six aging societies: France, Germany, Italy, Spain, the United Kingdom, and the United States. It argues that social security policy decisions go beyond economic theory into the realm of politics. Since the effect of aging on the pension systems calls for either higher contributions or lower pension benefits, the political process will have to reconcile the conflicting interests of different generations.

Private pensions and government guarantees: clues from Canada

N.L. Neilson and D.K.W. Chan

Journal of Pension Economics and Finance, vol.6, 2007, p.45-66

Economists and others have debated extensively the role of government in ensuring that pension benefits promised during a worker's career are realised in retirement. In Canada, approximately one-half of the workforce resides in a location that offers a government-backed guarantee of private pension plan benefits while the other half does not. The analyses reported in this article show that plans covered by the Ontario Pension Benefit Guarantee Fund exhibit a lower degree of funding per participant than do the remainder of the plans examined, supporting the argument that a government guarantee is related to a moral hazard problem in Ontario pension financing.

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