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

Activation, retirement planning and restraining the 'Third Age'

K. Mann

Social Policy and Society, vol. 6, 2007, p. 279-292

This paper looks at labour force participation rates in a number of OECD countries and examines policies designed to promote longer working lives and pension savings. In the context of older workers, retired people and the 'pensions crisis', active labour market policies can be understood in a number of ways, of which four are explored in the paper:

  • Getting older workers to remain in paid work and not seek early retirement via welfare benefits
  • Persuading all employees to actively 'choose' private pension savings
  • Getting some older workers to defer retirement beyond the age of public welfare retirement and remain in paid work
  • Applying techniques that can encourage citizens to reflect on the choices available to them and become active 'lifestyle planners' instead of passive consumers of benefits.

Assessing the capacity of pension institutions to build and sustain trust: a multidimensional conceptual framework

M. Hyde, J. Dixon and G. Drover

Journal of Social Policy, vol.36, 2007, p. 457-475

Successful pension systems require public trust, but, according to several commentaries, trust in pension institutions has declined in recent years. This article aims to develop a comprehensive set of benchmarks that may be used to inform assessments of the capacity of pension systems to build and sustain trust in diverse national contexts. Six benchmarks are identified: flexibility, inclusive administration, transparency, security, rights enactment and rights enforcement.

Global ageing and innovative public pension reforms

J. Capretta

Pensions International, issue 91, 2007, p.2-4

Looks at the economic and demographic factors driving reform of public pensions in many countries (including the UK), and the innovative reforms introduced by Sweden, Japan and Germany in response. Innovations included moves to notional defined contribution schemes and automatic adjustments to pay-as-you-go pension schemes. These are contrasted with Canada’s approach, which was to increase taxes to pay for a government-owned investment fund to offset the costs of higher pension spending in future. The author concludes that the success of these schemes gives hope for the future.

The handbook of West European pension politics

E. M. Immergut, K. M. Anderson and I. Schulze (editors)

Oxford: Oxford University Press, 2007

The book provides a complete overview of the political and policy issues involved in pension policy, and well as case studies of contemporary pension politics (1980 to present) in 16 countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, Switzerland, and the UK. Each chapter is written by an expert on pension politics and is presented in a standardized format with standardized tables and figures that describe: political institutions; government coalitions, parliamentary and electoral majorities; the party system; the pension system; proposed and enacted pension reforms in each country.

Pension non-discrimination rules and the incentive to cross subsidize employees

P. Brady

Journal of Pension Economics & Finance, vol. 6, 2007, p.127-146

Looks at the impact of non-discrimination rules imposed on US pension schemes by the US government. The rules are designed to ensure that pension benefits do not disproportionately accrue to employees on high salaries. Recent proposals to reform the rules would simplify them, but there are fears that low-paid workers may be discouraged from taking part. This article finds that only firms with a relatively low ratio of low-paid workers would have an economic incentive under a standard 401 (k) plan to cross-subsidize employees. Brady concludes that such firms probably employ only a small fraction of the workforce, so changes to the rules may have a relatively small impact in practice.

Pension Revolution: a solution to the pensions crisis

K.P. Ambachtsheer

Hoboken, N.J.: Wiley, 2007

This book examines the problems with defined benefit and defined contribution pension plans and presents a new pension design called TOPS - The Optimal Pension System. Pensions reform in Europe and elsewhere is examined in detail, with chapters focusing on the Netherlands and the US in particular. This book is written in a very accessible style, making this complex subject much easier to understand. The author is the Director of the Rotman International Centre for Pension Management at the University of Toronto and an acknowledged expert in the field of pension reform.

Pension assets and old-age dependency

Anon

The Economist, 16 June 2007, p.114

Summarises research by UBS which forecasts the level of pension assets per person in the UK and other countries, based on the ratio of over-65s to workers in 2025. In the Netherlands, where the ratio of over-65s to workers will be 34% by 2025, pension assets are expected to be worth $58,000 per person. In Japan the dependency ratio will be 50% by 2025 - but with pension assets of just 63% of GDP the value per person will be $22,000 per person. The UK’s dependency ratio and assets are, interestingly, very similar to Australia’s. Includes chart.

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