|
|
Pension Issues around the World
Resources
Also see our sections on
Social Pensions, Trade
Unions and Pensions
and US Pension
Issues
Articles in Arabic
| Chinese | French
| Russian | Spanish
Africa
Kenya: Kenya’s Civil Service
Pension Needs Review (August 6, 2007)
Policymakers in Kenya are not sufficiently noting the problems in
funding civil servants’ pensions. At present, civil servants participate
in the Civil Service Pension Scheme established under the Pensions Act
of the Laws of Kenya with guaranteed pension increases. It is a
non-contributory defined benefit scheme. In 2006 the government tried to
introduce individual contributions from the civil employees but then
deferred the decision. The author argues that the government is
currently facing difficulties paying pensions and that it should return
to the consideration of employees’ contributing.
South
Africa
: Legislation to Create
Single Public Service (July 30, 2007)
President
Thabo Mbeki announced the creation of a single public service that would
“spur economic growth toward Human development.” A program - whose
name suits quite well - will help the government in this task: it’s the
“Batho Pele (People First) programme”. The goal is to speed up the
public services, and to improve the linkage between the authorities and
the population. Tools to reach those objectives are nothing more than
boosting the capacity of the post offices. However this new system won’t
be created “at one go.” For example the Government Employees Pension
Fund is very complex and still needs to be unified to integrate workers at
the local and national level.
Kenya: Retirement Woes Mount as Workers Live Longer (June 26, 2007)
An extended life expectancy in Kenya creates a severe problem for the
pension management industry. Official figures estimate that because of
the AIDS pandemic someone born in Kenya is likely to die at age 49, but
actuaries predict that many seniors will live up to age 78 by 2050 as a
result of rising standards of living. Surveys by the Retirement Benefits
Authority (RBA) found that many Kenyans will outlive their life savings.
The Treasury is worried about a pension crisis because the
pension bill will grow to Sh24 billion in this new fiscal year and rise
at 15% annually.
Botswana:
Pensions for All? Ideas on Extending Pension Provision to the Low
Paid-Part 1 (May 8, 2007)
In Botswana, despite the fact that an increasing number of firms have
established pension funds for their employees, pensions are still not a
right for everybody. In the private sector, employers often do not cover
less skilled and lower paid employees. This situation has produced a
social problem--poverty in Botswana is particularly concentrated among
older persons. This article reports on some issues raised by a
five-yearly payout scheme—in short, recipients did not save the money.
It also gives a glimpse into the system of a proper pension contribution
and underlines problems with excessive administration costs.
Cote d’Ivoire:
CNPS, 80 Percent of Retirees Receive their Pension Through Bank Transfers (April 23, 2007)
(Article in French)
The director of the CNPS (National fund for social provision) gives a positive picture of the pension fund’s activities. Thanks to changes adopted since 1999, the national fund can distribute 80 percent of pensions through a bank transfer. Officials now make monthly payments, instead of quarterly, preventing long lines of Ivorian elderly waiting to get their pensions. However, as the
CNPS director points out, the objective is now to increase pension benefits. They represent 35-45 percent of the average income, much less than the 70 percent of the most prosperous Western countries.
Cameroon: A Bird in Hand (April 4, 2007)
This article refers to the seminar organized last week by the Ministry of the Public Service in Cameroon. For once, the government talked about the situation of pensioners in the country, whether they are civil servants or working for the private sector. Indeed, the country has no efficient retirement policy and very few Cameroonians can claim to be retirees. Older workers face huge difficulties when they want to receive their pension benefits: among other examples, the administration can ask them for a “certificate of stoppage of duty,” a “certificate to attest that they are still alive,” or their most recent pay slip.
Cameroon: Retirement, Differently (February 20, 2007)
(Article in French)
Most African countries do not have a national pension system: the
population is bound to save as much money as they can during their
working life. Older workers are often not able to retire for lack of any
sizeable pension. The Breweries of Cameroon prepare their employees to
leave beginning at age 50. Meanwhile, the company proposes that they be trained
in basic management and ways to look for financing. Besides providing
pensions, this Brewery of Cameroon initiative helps to find new
investors, which the country greatly needs.
South Africa: Social Security and Retirement Reform (February 2007)
In his State of the Nation Address on February 9, 2007, President
Thabo Mbeki announced the need for social security reform based on a
National Treasury paper. South Africa has already a “well-established
occupational and individual retirement funding industry that provides
protection to many, and a substantial social assistance grant program
that provides income support to the poor.” But South Africa has no
provision for social insurance. Mbeki’s government plans on creating a
mandatory, contributory and earnings-related system which will hopefully
realize the government’s commitment to a caring, poverty-free society.
Africa: What Is the Best Way to Save Retirees from Misery? (January 16, 2007)
Like other parts of the world, African countries must organize their pension systems. Because of
HIV/AIDS and the death of the breadwinners’ generation, older people are now looking after their grandchildren and have consumed whatever savings they had. The author identifies the Canadian experiences that could be implemented in Africa: either the Canadian Pension Plan (CPP) or the Registered Retirement Savings Plan (RSSP). One is a mandatory pension fund in which every worker over the age of 18 must contribute, as well as the employers. The other is a tax-free account in which the “individuals contribute, manage, and administrate their retirement finances as they see fit.”
Kenya: Kenyan Retirees Doomed to Poverty as Pensions Eat Up 25pc of GDP (January 8, 2007)
Some 1,352 pension schemes operate currently in Kenya. It is a reason why the country cannot pay a secure and reliable source of retirement income. A World Bank report has pointed out many of the problems facing the National Social Security Fund. It doesn’t compel high wage workers to make sufficiently high enough monthly contributions. The Fund has large administrative costs reducing the benefits that the NSSF can pay. The World Bank recommends that the country should create a fully-funded pension scheme where both employers and employees would contribute and in which benefits would be clearly defined. Alas, the article’s writer dismisses the notion of a social pension on the basis of age.
Return to Top of Page
Americas & Caribbean
Reports | Articles
Reports
Jamaica: Building a Viable Pension
Sector for Jamaica (August 5, 2007)
Jamaica, a country with a population of 2.7 million, confronts the
challenge of an increasing senior population. The author says that the
State pension system is weak. Private pension funds, in existence since
the 1940s, cover around 70, 000 private-sector workers in a 1 million
total workforce. In 1966, a National Insurance Scheme (NIS) went into
effect ensuring basic pension benefits to Jamaicans. Despite that
scheme, only one third of older persons meet the qualifying criteria to
receive the NIS pensions. The article examines some hurdles that the
government must address in to secure income support for its older
persons—increased longevity, informal workforce, the self-employed,
regulated fund management, discipline to avoid early withdrawals, and
inadequate payouts.
Chile: Report: Social Security: The Chilean Approach to Retirement (May 17, 2007)
Aging population, rising longevity, and relatively low fertility rates pose long-range financial challenges to the U.S. Social Security system. Arguing for reform,
US policy-makers often refer to the example of Chile, which initiated sweeping retirement reforms in 1981 that replaced a state-run, pay-as-you-go defined benefit retirement system with a private, mandatory system of individual retirement accounts where benefits are dependent on the account balance. This Congressional Research Service report points out that while the Chilean reform has contributed to the rapid growth in the economy over the past two decades and returns on pension fund investments have been greater than expected, the administrative costs have been high and participation rates have been modest at best. There is concern that the system does not cover the entire labor force and provides inadequate benefits to low income workers.
Articles
Canada: Younger
Generation Getting Retirement Message (July 23, 2007)
A survey by Decima Research shows that the younger generation of
Canadians is much better prepared for retirement saving than their
predecessors. The findings show that 70% of Canadians between the ages
of 25 and 34 have started their savings plan. "It is encouraging to hear
that younger Canadians are getting serious about retirement planning,"
says Mary Chan, Principal, Mutual Fund Marketing and Managed Account
Program. The surveys conducted in US and UK show almost identical
results.
Canada:
Addressing the Aging Workforce Issue
(June 18, 2007)
The Montreal Economic Institute suggests that an aging population risks
lowering economic growth and wealth creation in Quebec. The Province is
known for the lowest labor force participation among older persons in
North America. In response, the institute suggests postponing normal
retirement age to 67 and encouraging the participation of older persons
in the job market. Moreover, it recommends increasing the pension plan
payments by 0.7 % monthly rather than by the current 0.5 % for
retirements after age of 65. This implies a reduction of payments for
the retirees before the age of 65 by a similar percentage.
Canada: Research Reveals Few
Employers Taking Action to Retain Older Workers (June 8, 2007)
Manpower Canada’s survey involving more than 1,300 Canadian employers
found that 67% of the Canadian employers have no strategies to recruit
older workers or to retain them in the workforce. Conversely, a global
survey conducted in 25 countries found that employers in Japan and
Singapore are more advanced in retaining older employees. In 19 of the
surveyed countries, retention strategies were more common than
recruiting strategies. Considering the OECD findings claiming that
between 2025-2030, 12 million people a year will leave the workforce,
industry must adopt measures to assure long term productivity.
Argentina:
Elderly Persons Can Choose Their Retirement Plan (April 9, 2007)
(Article in Spanish)
Starting on April 9 and for the next 180 days, retirees have the option to choose to have a pension from a private company or a State pension. The Argentine government says that although each system has different rules and procedures, the main difference is not State versus private operation. This article explains the differences. If you are eligible for an Argentine pension, please click
here to read a guideline about deciding which retirement system is best for you.
Argentina:
New Workers Will Contribute 11% to Pension Fund (April 4, 2007)
(Article in Spanish)
All Argentine workers who start on or after May 28, 2007, will be required to contribute 11% of their salary for their retirement fund, unlike current workers who contribute 7% of their salary towards retirement. This policy will reduce a potential financial crisis of funding pensions of current workers as they retire.
Argentina:
Supreme Court Must Define Retirement Income (April 2, 2007)
(Article in Spanish)
The Argentine Supreme Court must resolve the issue of the value of the retirement benefit. While an existing law requires a 13%-increase on retirees’ pension, it does not dictate when the increase must take effect. The Government said it will increase the pension by 13% for all of the retirees and pensioners. The defense team, however, argues that the system has no automatic mechanism to ensure that the retirement income remains proportional to the cost of living. The defense team argues that it should not be up to the Executive Branch to decide when it is time to increase the benefits.
Argentina: Now People who under-contributed can receive a pension. (April 1, 2007)
(Article in Spanish)
The Government created a new system to reach people who didn’t pay sufficiently into the social insurance system over 30 working
years. Nowadays, people who are 70 years old, and have at least 10 years of contributions, can retire. But also the people who paid less than 10 years of contributions into the system can retire as well. In the case of the latter, the government deducts a portion of the pension payment to be used as a “delayed” contribution toward completing their obligation. A lot of unemployed and others who worked “off the books” in the informal sector will have a chance to receive a pension payment in old age.
Peru: Peru Passes Controversial Law on Free Disaffiliation of the AFP
(March 28, 2007)
(Article in Spanish)
Alan García Pérez, the president of Peru, promulgated a controversial law to permit Peruvians to return to the national pension system (SNP) if they think it will benefit them more than their private pension. The government will send out details of the SNP to all workers within 90 days so they can decide which pension system would be better for them.
Argentina: Half of the Households Depend on State Income
(March 28, 2007)
(Article in Spanish)
A private study reveals how the government’s income distribution is disproportional.
Among the poorest 20% of the population, 1 out of every 20 households receive pensions. Among the richest 20% of the population, however, 1 out of every 3 households receives the state compensation. Because more than half of the population depends on this kind of pension to survive on a daily basis, the poor will remain poor, which means a large number of elderly persons will suffer.
Mexico: Mexico's Lower House Passes State Pension Reform Bill Amid Protests
(March 22, 2007)
The Mexican Senate may resist approving the lower house’s vote to change the state workers’ pension system, if the Senators pay attention to their state workers. This pension bill would compel government workers to switch from the current defined-benefits pay-as-you-go system to individual accounts with defined-contributions. Many state workers, along with legislators from the Democratic Revolution Party, demonstrated against this privatization plan. Investors, on the other hand, welcomed the possible chance to make money on public pensions.
Canada: Workers Allowed to Semi-Retire and Still Contribute to Pension (March 20, 2007)
The Harper government intends to help seniors achieve semi-retirement, at the same time helping Canadian companies that need to keep their experienced workers. This will be accomplished through a new decision allowing “employers to pay a partial pension to an employee while that same worker is also contributing to the pension plan.” Another measure will complement it: the working age limit will be raised to 71. Those changes will encourage seniors to work longer, and thus pay more taxes.
Argentina:
Pension Contribution Will Increase in 2008 (March 5, 2007)
(Article in Spanish)
The Argentine government plans to change its pension contribution and collection systems. First, employees will have to contribute 11% of their salaries towards the pension instead of contributing the usual 7% of their salaries. Second, employees will have a choice of which retirement plan works best for them.
Chile:
Is It Possible to a Receive Pension from Abroad? (March 5, 2007)
(Article in Spanish)
Many Chileans live abroad and wonder if they can receive their Chilean pensions in their host countries. Unfortunately, with very, very few exceptions, it is not possible for expatriate Chileans to receive a pension even if they have met the requirements to be eligible for pension. However, if they return to Chile, they can apply for a pension.
Chile: The Post Office Lost My Check
(February 27, 2007)
(Article in Spanish)
All pensioners receive their pension check by mail. However, some checks never arrive for pensioners because the postal service is unreliable. An elderly woman went to the pension office (ING) and she was not able to
recover the pension that was lost in the mail unless she writes to the ING and request them to send another check. She asked to have her check put into a direct deposit account to avoid the risk of losing yet another pension check in the mail. Sadly, the ING told her that it was not possible.
Canada:
Court Set To Rule on Massive Gay Class Action Suit
(February 27, 2007)
Canadian courts have denied gay and lesbians the right to collect pensions that their partners
paid during their working years up to the year 2000 when the government passed legislation allowing same-sex surviving partners to collect partners' pensions. However, this legislation is effective only if the same-sex partners had died after January 1998. This law provoked more than 1,000 gay men and lesbians whose same-sex partners died in the period between April 17, 1985 and January 1, 1998 to file a class action suit. George
Hislop, a longtime activist who initiated the lawsuit, accused the government of discrimination by not setting the cut-off point at 1985, the year Canada extended legal rights to equality to gay and lesbian
people.
Chile: No Benefits for Not Having Pension (February 25,
2007)
(Article in Spanish)
The Chilean pension system failed this older woman and affected many other aspects of her life. Francisca Boetto Vargas tells a Catch-22 story about her elderly grandmother. The 73-year-old
woman went to a public transportation office to obtain a half-fare smartcard. After being forced to go to four different places because no one knew how to assist her, officials told her that she had to show her pension stub to receive the half-fare smartcard. Unfortunately, the grandmother does not receive any kind of pension or financial support from the government. Therefore she is denied the half-fare smartcard and had to pay the full fare.
Colombia: University of Antioch Retirees Do Not Want to Leave
(February 22, 2007)
(Article in Spanish)
Older persons in Colombia found that neither demonstrations nor human rights claims
could defend their right to choose where they want to go for healthcare. The Minister of Social Protection decided to deny pensioners who retired from the University of Antioche the right to continue receiving healthcare from there where they pay a small amount for healthcare. These pensioners are required to look elsewhere for healthcare services, that will cost more for services that are less adequate than those from the University.
Chile: In Order to Retire, It Is Necessary to Pay Intermediation Commissions
(February 16, 2007)
(Article in Spanish)
In Chile, selecting a retirement plan that is perfect for you can be both daunting and confusing. However, it is necessary to pay intermediation commissions, that cost up to 2.5% of the premium or the pension balance of the individual. The Superintendent of the AFP, Solange Berstein, explained that it is important to keep certain things in mind when selecting the ideal retirement plan. Some items include the intermediation cost, the reference commission and insurance agents. This article explains these and other issues and how such commissions may impact each retirement plan option.
Chile: Reform Brings Drastic Flexibility to Receive Pension Earlier
(February 14, 2007)
(Article in Spanish)
A new reform and the creation of the common basic pension will open a window of three years so that Chileans can retire early. This radically lowers the present savings requirements for pension eligibility. This law is expected to be in effect in the year 2008 and during the first year of the law, pensioners will be required to have
savings of at least $60,000, which is less than half of the present requirement of $132,000. This article explains the legal reasons behind this drastic reform and how it will impact workers and pensioners.
Mexico: Bulletin Number 0598: Closing of the Meeting on the Update in Social Security
(January 2007)
(Article in Spanish)
This report sums up the social security meeting at the Mexican House of
Representatives. The president of the commission, Miguel Navarro Ángel Quintero,
said that changes must be made to the social security system by increasing the amount of pensions and extending what they cover, following the European models. He argues that the increase would promote economic growth. However, the president of the Federal Commission of Competition, Eduardo Perez Motta, stated that it would cost more in Latin America than it does in England and Sweden. Perez Motta made some recommendations on how to promote retirement savings, which are detailed in the report. The Secretary General of the National Union of Workers of the Social Insurance, Valdemar Gutiérrez Fragoso, pointed out that it is the government’s responsibility to protect the Mexicans’ pension and health rights.
Dominican
Republic: Police Pensioners Blocked J. F. Kennedy Avenue in Response to Delayed Pension Payment
(January 30, 2007)
(Article in Spanish)
In Santo Domingo, police pensioners blocked the J. F. Kennedy Avenue, an important street, for not receiving their pension. They protested that the government is spending their pension money on the construction of a new metro system. Burning tires, trunks, and even a human umbilical cord, marked this chaotic street scene.
Argentina:
Argentina Gives a Strong Turn with Pension System (January 25, 2007)
(Article in Spanish)
Following the Chilean model, Argentina privatized its pension system in the mid-1990s. People were able to choose between a private pension system and a state pension system. However, if they chose to be part of a private pension, they could not go back to the state pension system. This year Argentina decided to experiment with some reforms to their pension system: Argentina will allow people to switch back to the state pension system in 180 days. From then on, the government will give people that choice every five years.
Chile: The
Retirement Fund Administration and Social Security: Chile’s Reform
Project 2006-2007 (January 16-17, 2007)
(Article in Spanish)
This report contains an array of information regarding pensions in
Chile. It explores the importance of an established pension system, why
the Chilean privatized pension system needs to be changed and how. Mr.
Uthoff used statistics to back up his data and he uses different graphs and
statistics to show how the pension system could be reformed.
Mexico: The Fight for Oaxaca
is my Legislative Terrain: Gabino (January 22, 2007)
(Article in Spanish)
Politician Cué Monteagudo assures Oaxacans that his legislative
priorities are those concerning education, social justice, social
security, respect of human rights, protection of natural resources,
refunding national institutions, and regaining
Mexico
’s integrity in
international political matters. Monteagudo plans to lead
initiatives to pass a State law that
guarantees pension support for older adults.
This is the starting point in his campaign that attempts to work
toward peace, justice, and the development of
Oaxaca
and
Mexico.
Colombia: The ABC of the Social Security Situation (January 18, 2007)
(Article in Spanish)
The Colombian government assured they will respect the workers’ right to social security. Workers were concerned because the Colombian government was making reforms that would affect social security and healthcare. The government assured that those who are on pension will continue to receive pension and that under the new system, current workers will have a pension as well. This article explains the ABCs of the social security situation, who this will impact and in what ways.
Canada: Canada’s Pension Predicament (January 2007)
This report from the Canadian Federation of Independent Business emphasizes the widening gap between public and private sector retirement pension plans. While the private sector has been moving toward defined contribution plans, the public sector has stayed with defined benefit plans that are generally considered more generous for employees. This report studies specific points that it suggests need change: early retirement, incentives to retire, pension coverage, employed-sponsored pension plans. However, as it states, “the overall objective of any policy reform would be to level the playing field between the treatment of retirement savings for public and private sector individuals,” so as to avoid
subsidizing retirement lifestyles. Or do the “reformers” want to encourage a race to the bottom?
Canada: Canadian Workers Most Worried about Permanence of Pension Plans (January 22, 2007)
The “AXA Retirement Scope” report surveyed active workers and retirees in 16 countries. It appears that Canadians worry about the future of their government pension plans. Although Canadian retirees have a high standard of living, especially thanks to an efficient health care system, they fear not having invested enough in
savings. Among the already retired, some felt that their quality of life has diminished.
Dominican
Republic: Pension Rejected by the Last Management (January 4, 2007)
(Article in Spanish)
Senator Reinaldo Wall Perez, who is President of the Senate in the Dominican Republic, opposed the Congress’ approved privileged pension, a package given to all members of Congress upon retirement. Senator Wall Perez insisted that the Government must analyze each case carefully because there are Congressional members who do not merit the privileged pension package.
Dominican
Republic: Pensioned Teachers Live with Many Calamities (January 4, 2007)
(Article in Spanish)
Teachers who have spent their entire working career in the educational system retire with an income that is equivalent to between US$67 and US$200 a month. Most receive pensions closer to US$67. However, a Dominican cannot live a healthy life on that amount.
Chile:
Pension Alternatives (January 3, 2007)
(Article in Spanish)
Ideally, someone works for 30 to 35 years and then upon retirement, receives a stable and comfortable pension. But government pensions, particularly in poor countries, are not always reliable, so it is best to have an alternative way to save money for retirement. This article explores the two types of savings including, Programmed Retirement and Immediate Life Rent. It also shares the pros and cons of such plans and how to determine which of the two savings—or a little of both—is appropriate.
Dominican
Republic: The Senate Defends Miolán’s Pension (January 3, 2007)
(Article in Spanish)
The elderly former delegate of the Dominican Revolutionary Party, Ángel Miolán, receives a pension of RD$52,000 a month. Some citizens object to the amount of his pension and cited nepotism and favoritism in determining the pension’s high level. It seems such high pensions for politicans are a common practice. However, the Senate defended Mr. Miolán’s pension. Carmen Miolán, Mr. Miolán’s daughter, defended her father and stated that he deserved the pension for all the work and effort he dedicated for the government.
Uruguay: A New Law in Uruguay for Persons over 70 Years (December 27, 2006)
(Article in Spanish)
A new law took effect in December 2006 for persons older than 70 years who receive a pension of less than $4.400 (USD183.26) per month. Around 50,000 of these retired people will receive an additional $120 (USD5) per month for the next five years. Some deputies complained that this very small payment only helps some retired people. They urged that all retirement pensions be increased rather than giving this small amount to only a few older persons.
Return to Top of Page
Asia Pacific
Reports | Articles
Reports
Report: China: Pension Reform in China:
Progress and Prospects (2007)
(PDF format, 49 p)
China is developing the largest pension system in the world. The goal is
to build a system which adapts to a rapidly aging population in a
predominantly underdeveloped, but growing, economy. This paper delivers
a description of the historical development of national old age
insurance system in China. Subsequently, it provides a detailed
examination of the pension arrangements implemented by the end of 2006.
It finds that despite progress, the coverage of the system among urban
employees remains low while the rural population is outside the national
pension system. Finally, the paper reveals the importance of extending
insurance coverage by encouraging financial commitments to the National
Social Security Fund by 2015 to manage the side effects of the rapidly
aging population. The reader should bear in mind that the estimates in
the paper might not fully correspond to other Chinese sources.
Report: China: Pension Reform in China:
Progress and Prospects (2007)
(PDF format, 49 p)
China is developing the largest pension system in the world. The goal is
to build a system which adapts to a rapidly aging population in a
predominantly underdeveloped, but growing, economy. This paper delivers
a description of the historical development of national old age
insurance system in China. Subsequently, it provides a detailed
examination of the pension arrangements implemented by the end of 2006.
It finds that despite progress, the coverage of the system among urban
employees remains low while the rural population is outside the national
pension system. Finally, the paper reveals the importance of extending
insurance coverage by encouraging financial commitments to the National
Social Security Fund by 2015 to manage the side effects of the rapidly
aging population. The reader should bear in mind that the estimates in
the paper might not fully correspond to other Chinese sources.
France:
Report on the Preparation of Pension Files for Civil Servants (February
2007)
(Report in French)
Civil and army pensions from the French State represent a big financial
and human stake: in 2007 France will send pensions to 2 million people,
accounting for 17 percent of its budget. A State-ordered audit emphasizes
the atypical and inefficient management of public pensions. Because the
pension amount is only calculated at the end of the career, civil servants
do not get any prior information about their benefits. The report suggests
that French State should “move to a type of management like pension
funds” and rely on individual pension accounts.
Articles
China: Five Faulty Beliefs About Income Security in Old Age (August 13, 2007)
(Article in Chinese)
Many people hold faulty beliefs about saving for old age. Some believe that they have made enough money in the stock market and that they do not have to worry about saving for old age now. Some believe that the government provides social security to the elderly so that they don’t have to worry about it themselves. And others think that they have sons who should support them during their old age. However, all these beliefs are not completely correct for everyone, and may result in financial difficulties for the elderly.
Malaysia: Survey: Malaysians
Indifferent about Finances after Retiring (August 8, 2007)
An alarming number of Malaysians feel unconcerned about their financial
stability in retirement, say survey researchers. Only 34% of the
respondents save regularly for the retirement although most wish to
travel, spend time with their family and get involved with the community
once they retire. "They believe that they just save as much as they can
now.” said the Prudential chief executive officer Tan Kar Hor. He also
mentioned that Malaysians’ rarely turn to financial experts to plan
their retirement. The survey raises a question: Will Malaysians have
sufficient savings to cover their expenses when they retire?
China: Audit of 35 Billion Yuan Rural Pension Funds Begins (August 2, 2007)
(Article in Chinese)
By 2006, China had 1,905 counties that had adopted the Rural Social Security System with over 53 million participants and over 35 billion Yuan funding. As the first step to the rural pension system reform, the National Audit Office started a nationwide audit of rural pension funds. This audit is expected to take 4 months to complete, ending in November.
China: Paying Pension Taxes for Years, but No Record Found in the Computer System (July 31, 2007)
(Article in Chinese)
In 2004, Ms. Wang from Anqing City, Anhui Province, found out that the Social Security Department’s database did not have her record despite the fact that she had been paying pension taxes for three years. Moreover, she found that the ID number was entirely wrong on her pension statement and invoices for the pension tax payments. In order to correct this, Ms. Wong went to the city’s Labor Management Center and Social Security Department a dozen times. After 2 years’ work, she finally got the information corrected.
Australia: Food and Heating Hurt Elderly the Most (July 31,
2007)
Australian pensioners are facing a financial shortfall as food, utilities, and healthcare, all of which are major expenses for retirees, have sharply increased in price. Moreover, the Australian Families Association reports that many pensioners are giving the bulk of superannuation payments to their children to help them buy property or pay for their grandchildren’s child care. As a result, pensioners are rapidly draining their life savings, and these cost pressures could even “compromise [older persons’] nutrition.”
Japan: Japan’s Pension Scandal Becomes a Political Battle (July 23, 2007)
(Article in Chinese)
The scandal in Japan’s pension management has become the biggest political issue in Japan’s election. The changing population structure has provoked this crisis in the penson system. Although the current debate on pension system has not produced a pension system change, Japan’s population structure seriously challenges the existing pension system. It is estimated that by 2010 Japan will start to have a decrease in its total population and the younger population will decrease rapidly. If the pension system continues to operate as it is, Japan’s pension system will be unsustainable in the near future.
Japan: Government panel
backs revised pensions in 15 cases (July 14, 2007)
A government appointed panel decided to apply specific standards to
correct numerous pension record-keeping errors by the Social Insurance
Agency (SIA). The panel has chosen to examine 15 out of 284 cases in
which individuals claim they paid premiums while SIA has no record of
payment. The panel concluded that the pension records should be
corrected in the 15 cases. The guideline published by the panel on
Monday also promised to accept claims without tangible proof of paid
premiums if they seem to be reasonable.
China: A Temporary Laborer Won His Case Over Pension Contribution (July 3, 2007)
(Article in Chinese)
Temporary labors are often excluded from fringe benefits, pension, and medical insurance. On June 21, 2007, Xiaoxian Gong, a temporary laborer who got fired after 4 years of work, won back his pension and other benefits in a lawsuit against his previous company. He was hired as a temporary laborer in Gansu Chinese Medical Hospital in 2002 and got fired in 2006 without any legitimate reasons. As the hospital did not give him any financial compensation as it fired him, Mr. Gong started a lawsuit in 2007. After several appeals, he not only got financial compensation but the hospital is required to contribute to the pension system for Mr. Gong for the 4 years he worked at the hospital.
China: One-Hundred Thousand Farmers Without Land Receiving Pension for Town and City Residents (June 21, 2007)
(Article in Chinese)
With urbanization, the Zhejiang Provincial Government stipulated clearly that all governments should make efforts to protect the rights of farmers who have lost their land. Wujing district government provided pension coverage to these farmers and raised the minimum pension payment from 200 Yuan to 500 Yuan per month, which successfully solved the income security problem for the elderly farmers without land.
China: New Pension Policy in Guangzhou (June 21, 2007)
(Article in Chinese)
The Guangzhou Municipal Government has recently passed a new pension policy which makes a series of changes over the existing pension system. The policy will bring changes to the pension tax, rate, payment etc. This new policy also specifies ways to compensate those who will experience a loss under the new pension system.
India: 106 Year-old Gets
Revised Pension after Wait of Eight Years (June 19, 2007)
In India, a 106-year-old veteran from World War II finally received a revised
pension appropriate to his rank after years of battle with local
officials. The government welfare officer said that defense personnel
from other states should also complain to get their pensions. He added
that pension related problems are often due to administrative issues,
absence of relevant information and lack of communication between the
regulatory bodies.
China: Farmers’ Pension Fund Lost 250
Million Yuan (June 18, 2007)
(Article in Chinese)
From 1996 to 2004, the farmers’ pension fund of the Four Season Town, Haiding District, Beijing loaned accumulatively 250 million to Beijing Da Di Technology Inc. In March 2007, Da Di Technology Inc was unable to repay the loan due to the company’s financial difficulties and the farmers in Four Season Town are facing the problem of not receiving pension payments on time.
Australia: Government Reaps Millions from Elderly (June 11, 2007)
According to Aged Support, hundreds of Australians who work beyond retirement age in return for a pension bonus worth up to $32,000 die before they get the benefit. The work-till-you-drop policy has saved the Federal Government tens of millions of dollars in pension payments, but left it severely embarrassed. The Community Services Minister now promises to change the law that prevents spouses of elderly workers from claiming the bonus owed to their dead husband or wife.
Singapore: Elder Workers in
Singapore
Suffer From Neglect (June 1, 2007)
(Article in Arabic)
At a recent meeting that brought together the public and private
sector in
Singapore, a senior official for a
Singapore
company said that the state must rethink the ways in which it goes about
hiring elder persons. The current law on employment in
Singapore
will be renewed in 2012. Officials expect it will offer provisions for the
employment of elder citizens, should they wish to leave retirement and
re-enter the work force. In the meantime, the
Singapore
government hopes to partner with the private sector on the rights of elder
persons in the workplace.
Japan:
Japan
Worried about its Elderly Population; Resorts to Women and Older Persons
to Fill the Gap (May 17, 2007)
(Article in Arabic)
Japan
is worried about its aging population; many have said that it might not be
able to maintain its production levels if younger persons do not enter the
workforce. In an effort to circumvent a drop in production levels, more
and more Japanese companies are hiring older workers, or retaining them for longer periods of time. Older workers say they are happy to
work as long as they can, and managers say that older workers are actually
more productive than their younger counterparts. The government has also
increased the age of retirement from 60 to 65. “There are four solutions
to our lack of workers in
Japan,” said one company president. “We can hire elder persons, women, or
foreigners. After that, the only solution we have available to us is
robots.”
Taiwan: The Government Wishes to Pass its New Law on Pensions Quickly (April 24, 2007)
(Article in French)
A Chinese newspaper revealed a plan to change the Taiwan pension system. The project specifies that “persons over 65 years old, who have paid contributions for at least 40 years, will entitled to a monthly pension of NT$ 7603 (about US$ 265).” The law would also help people that are not covered with private insurance. The government would pay a portion while private funds would finance the remainder. The government spokesperson, Mrs. Chen, announced that the government will not increase the social funds as long as the new pension system is not implemented.
Philippines: Arroyo Asks SSS to Hike Pensions By 10% (April 19, 2007)
Filipino President Macapagal-Arroyo proposed to raise the pension of SSS (Social Security System) by 10 percent, only few months after already increasing it. To finance such a proposal, she called for the generosity of employers’ confederations. She’s also planning to activate some 200,000 SSS accounts in order to receive more contributions; among others the President asked the SSS to increase the coverage of overseas workers, especially those living in the US.
India: Micro-Pension Efforts (March 26, 2007)
Members of a Self-Employed Women Association launched a micro-pension initiative one year ago. Other cooperative banks followed this example and created pension funds that will take contributions from self-employed and especially women. Micro-pension funds invest their contributions and give back their benefits beginning at the age of 58 years. Particularly efficient in rural areas, the micro-pension system encourages women, who are marginalized, to “start entrepreneurial projects.”
China: Provide Income Security to the Chinese Elderly (March 16, 2007)
(Article in Chinese)
As China has become an aging society, it faces the challenges of ensuring every Chinese elder person with a happy life in retirement. During the sessions of National People’s Congress (NPC) and Chinese People’s Political Consultative Conference (CPPCC), many representatives expressed their concerns over the elderly income security problem. The representatives proposed expanding the pension coverage to the rural areas as well as supporting many channels to give income support to urban older persons.
China: Establish a Pension System that
Fits the Needs of Migrant Farmers (March 8, 2007)
(Article in Chinese)
As more and more farmers migrate into cities and become the “rural
workers,” they need some pension coverage, an issue that has caught the
attention of policymakers. During the Chinese People’s Political
Consultative Conference (CPPCC), Li Zhenya, a CPPCC committee member,
proposed establishing a pension system that fits the needs of the
migrant farmers. Meanwhile, Sun Jie, a professor at Economic and Trade
University submitted a similar proposal titled “Suggestions to Establish
a Pension System for Migrant Farmers”. Both proposals suggest a pension
system with individual accounts instead of pooled accounts. In order to
benefit fully the migrant farmers, the pension system should attempt to
use a low tax rate, to have wide coverage, and to be easy to transfer
among different regions.
China: China Needs to Establish a
Survivor’s Pension Insurance System (March 7, 2007)
(Article in Chinese)
According to Pei Xiaomei, Professor of Sociology at Tsinghua University,
China should establish a survivor’s pension insurance system soon in
order to provide old age income security to the elderly who are not
covered by the current pension system due to their insufficient working
years and contribution to the pension system. In China, the older
persons constitute a large proportion of the population living in under
poverty. And among the impoverished elderly, elderly widowed women with
no income need the most attention. The current social security system
does not provide effective protection for the widowed elderly with
sufficient income security.
China: Fair Pension (March 7, 2007)
(Article in Chinese)
The National People’s Congress (NPC) and the Chinese People’s Political
Consultative Conference (CPPCC) accepted the proposal titled “Fair
Pension” for discussion proposal for the first time in history. “Unfair
pension” as a social problem refers to two issues. First, it comments on
the huge difference in pension levels between retirees from government
agencies and retirees of enterprises. Second, it also refers to the fact
that a large part of Chinese citizens have no coverage in the national
pension system. For instance, 900 million farmers are still not included
in the pension system. The Chinese government must resolve how it will
deal with the disparity in pension coverage for all its citizens.
China: Pension Can Differ by Eight Times
(February 28, 2007)
(Article in Chinese)
China’s pension system lacks equity due to the huge difference in
pension levels depending on which region the retirees have worked and
whether s/he worked for government agencies or enterprises. Therefore,
the National People’s Congress (NPC) is going to discuss the proposal of
a pension system managed at the national level. This proposal suggests
resolving the disparities in the pension system with structural
adjustments in the system. The proposal suggests managing the pension
system at the national level, increasing the pension of enterprise
retirees, and adjusting pension levels to reflect a fair system.
India: Government Likely to Create Pension Fund for Unorganized Sector (February 22, 2007)
Prime Minister Manmohan Singh announced last month “the need for a comprehensive pension system for workers in the unorganized sector” because, until now, only government workers benefit from old-age coverage. The parliament will present a bill on “Unorganized Workers’ Social Security,” setting up a national pension fund for unorganized workers, i.e., 93% of the Indian labor force. However, details about contributors, implementation and modalities of payment still have to be determined.
China : Yun
Nan
Province
Combines Home Elderly Care with Social Elderly Care
(February 8, 2007)
(Article
in Chinese)
On February 7, 2007, Yun Nan provincial government signed into law
Yun Nan’s 11th Five-Year Plan for the Elderly, which requires establishing an elderly care system that combines social service with home care. According to the Plan, Yun Nan provincial government will increase the funding towards a social pension system, establish a service system that accommodates both home care and institutional care for the elderly, facilitate the expansion of infrastructure that benefits the daily life of the elderly, and promote the formation of an “elderly industry” that provides products and services geared towards the special needs of the elderly.
China: Shanghai Will Establish a Pension
Company to Manage Corporate Annuity Fund (February 3, 2007)
(Article in Chinese)
A Shanghai Regulatory Commission spokesperson stated yesterday that a pension company will be formed very soon. This company will manage the private enterprises’ annuity fund that is currently managed by Shanghai Corporate Annuity Fund Development Center. Several banks, financial institutions and insurance companies have showed interest in participating in the to-be-established pension company.
China: Pension to Be Fixed for
Its “Differential Treatment by Gender” (February 3, 2007)
(Article in Chinese)
During this year’s session of CPPCC (Chinese People's Political Consultative Conference), the Shanghai Women’s Federation submitted a Draft Resolution regarding Eliminating Pension Gaps by Gender, which received much attention. The difference in pension by gender has gradually become a sensitive topic among
retirees and the public. Men tend to have a larger pension than women even if they have a similar education background and the same years of work experience. This gap by gender is largely due to the difference in the stipulated retirement age between men and women. The retirement regulation, passed into law over 60 years ago, requires men to retire at age 60 while women retire at 50 or 55, depending on the nature of work. This regulation leads to shorter years of work experience for women, and hence a smaller pension.
New Zealand: Kiwis
Still Stalling on Retirement Plans (February 1, 2007)
While the “AXA Retirement Attitudes” survey shows that only 72% of New Zealanders have started to save money for their future retirement, New Zealanders are confident that they’ll have a sufficient retirement income. The survey confirms many problems for their future: New Zealanders don’t realize they must save for their future retirement. The Kiwi system is not mandatory--consequently many don’t save for their retirement years. Some expect the government to restructure the retirement scheme; others don’t understand the existing system; most are ignorant about the “KiwiSaver,” a government workplace savings program.
Return to Top of Page
Europe
and Central Asia
Reports | Articles
Reports
UK: 25p is an 'Insult' to over-80s
(August 6, 2007)
When pensioners in Britain reach 80, the government increases their
pension by the Age Addition. The latter has not been increased for 36
years since it was introduced in 1971. Jim Barry, a disabled World War
II veteran from Skegness, Lincolnshire says: 'This is not only farcical
but insulting. I served my country during the war. Is this what the
Government thinks I am worth?” The most elderly seniors feel insulted to
receive such a small amount. It’s not enough to buy a “first-class
stamp.” The British Government responds that the Age Addition presents a
taxable amount which, if increased, would reduce many retirees’
entitlement to means-tested benefits
Italy: Italy Becoming Prime Retirement Destination (August 11, 2007)
Recent changes in Italian law turned the country into one of the most
attractive retirement destinations. One of the adjustments was the
abolishment of the inheritance tax in 2001 which helped to facilitate
the transfer of assets from parents to children. A stronger family and
community ambiance together with a nice climate, combine to encourage
older persons to spend their retirement years in Italy.
Report: The Transition of Women
and Men from Work to Retirement (August 3, 2007)
(PDF format, 8 p) (Also available in
French)
The official retirement age rests at the same level throughout most
European countries, ranging from 60 to 65 for women and 62 to 65 for
men. Nevertheless, the age at which Europeans leave the labor market
varies significantly across European Union (EU). Statistics show that
the age of withdrawal in different European countries is below the
official retirement age. The following report tries to estimate the
median age of retirement in EU and difference in retirement trends
between men and women in Europe.
UK: Report: Working Hours Flexibility and Older Workers' Labor Supply
(July, 2007)
(PDF format, 52 p)
The following paper examines the presence of the hours constraints in
the UK labor market and their influence on the supply of older labor
force. Basing on the 1991-2004 data, the findings indicate that
over-employed male workers can reduce working hours with their employer
before their retirement. Nevertheless, the findings show that
over-employed women generally leave the labor market as a consequence of
hours constraints. More importantly, this paper discovers that even
though more flexibility in working hours may raise labor participation
among older women, it will not largely affect the total supply of the
older workforce.
Report: UK: 2007 Pension Trends Survey Report (May 31, 2007)
(PDF format, 33 p)
The Association of Consulting Actuaries’ (ACA) 2007 Survey on Pension
Trends questioned over 330 UK employers, with scheme assets of more than
£127 billion and 2.1 million members. The surveyors discovered that the
majority of UK employers expect that pension policy reforms will cause a
leveling-down in pension contributions and an increase in scheme
closures. The employers worried about whether the Government policy
would effectively promote occupational pensions. Furthermore, the report
discovered that almost 40% of small firms will likely leave the current
pension schemes and reduce existing benefits to lessen the extra costs
of personal accounts. These findings call for policy changes to provide
better financial incentives to encourage pension saving and promote risk
sharing schemes in the UK.
Report: England: Pensioner
Poverty over the Next Decade: What Role for Tax and Benefit Reform?
(July 2007)
(PDF format, 117 p)
Researchers look at potential poverty among pensioners in England over
the next ten years, using a number of different tax and benefit
policies. The study tried to model future demographic structure and
incomes of individuals aged 50 and above, simulating their future
mortality, health, receipt of disability benefits and labor market
conditions. The experts applied various tax and benefit systems to the
simulated population to test their effects on the net income and
pensioner poverty. The report writers’ argue that the government should
ensure complete take-up of means-tested benefits to rescue millions of
older British people from impending poverty.
Report: FROM RED TO GRAY, The “Third
Transition” of Aging Populations in Eastern Europe and the former Soviet
Union (June 20, 2007)
(PDF Format, 272 p.)
According to the World Bank’s report based on research carried out in
2005, Eastern Europe and the former Soviet Union will be among the
oldest populations in the world, due to a decline in fertility and
increasing life expectancies. One person in every five in most of the
region’s countries will be over the age of 65. Consequently, the report
recommends that governments undertake measures to prevent an economic
downturn and fiscal instability. The Bank suggests policies to
strengthen pension systems and to stimulate productivity and labor force
participation.
Report: Germany: The Victory of Hope over
Angst- Funding, Asset Allocation, and Risk-Taking in German Public
Sector Pension Reform (April 2007)
In many rich countries, public employee retirement systems operate on a pay-as-you-go basis. Current workers pay taxes that support retired workers. Unlike the past, retirees now live much longer and there are fewer younger workers entering the labor force. Look at Germany. With a high unemployment rate, some young Germans can’t find jobs and therefore cannot pay taxes to support retirees. In this situation, some experts argue for a pre-funded pension system. This report examines the risks and rewards of a pre-funded pension system, projected over the next 50 years.
Report:
France: Informative Report on the Improvement of Transparency Regarding
Pensions and Incomes in the French Overseas Territories (March 13, 2007)
(Report in French)
The French government ordered this report on the situation of French
civil servants who live in overseas territories who are often accused of
receiving too many benefits.. However, this report had to avoid
stereotyping the situation. Today, most of these territories face economic
crisis. Residents face more expensive living conditions and real estate
than the average people in metropolitan France. Concerning pensions, the
report proposes to limit them at the current level to reduce the gap in
living standards between retired top civil servants and retirees
originally born overseas.
Europe:
Report:
Mandatory Employer Pensions in Ireland, Germany, and the United Kingdom
(January 2007)
This AARP paper describes Germany, Ireland, and the United Kingdom’s
mandatory employer-based 401(k)-type pension plans as a possible model
for the US so that pension coverage and retirement savings can be
increased.
Articles
Russia: From October 1 In
The Basic Pensions of All Types Will be Increased In Russia (August 16,
2007)
(Article in Russian)
The first deputy prime minister of the Russian Federation, Sergey Ivanov,
declared that starting on October 1st 2007, the Russian government will
increase the basic portion of all types of pensions. The new basic
old-age pension will be 1260 rubles, a 13.2% increase. "Of course, we
would want to raise [the pensions] more, but we should all admit that
the increase is rather significant," said the first deputy prime
minister.
Sweden: Changes in the Pension System: the
Swedish Experience Is Among the Most Ambitious and Original (July
12, 2007)
(Article in French)
A report from a French audit mission on Social Security confirmed that
industrialized countries can still save their public pension system.
Sweden does not offer a parallel private system, it implemented a new kind
of defined contribution plan called “notional accounts.” Those changes
in the system keep the “pay as you go” principles: the effort to
contribute is favored, and the financial realignments will no longer be
sent back on the future generations.
Russia: Pensions
Separated from Taxes (July 11, 2007)
(Article in Russian)
Employees of small organizations can stop worrying about receiving a pension
during retirement. The Constitutional Court has recently addressed the issue
after the general jurisdiction courts had been flooded with complaints
regarding employers who refused to pay the social tax. The state will pay
the pensions even if the employer did not pay the state social tax.
Employees will receive old-age allowance based on the duration of their work
life regardless of the conscientiousness of their employer.
Uzbekistan: Uzbekistan to
Increase Public-sector Wages, Pensions, and Social Benefits (July 11,
2007)
(Article in Russian)
The president of Uzbekistan announced an average 25% increase in
public-sector wages, pensions, social benefits as well as student grants
as of August 1, 2007. The minimum wage is going to equal 15525 soms
(about $12) a month and the minimum pension 30750 soms (about $24). The
presidential press service also declared a general plan to increase
significantly the wages and social benefits until 2010.
Russia: Russia Needs a New
Pension System (July 7, 2007)
(Article in Russian)
As a result of numerous changes installed throughout the transition to a
market economy, older persons in Russia now represent the poorest layer
of the society. Today, the average pension in Russia is only 3000 rubles
(about $117) per month, which represents 26% of the average salary.
According to estimates, the minimum acceptable income level in Russia
should be twice the subsistence level, which is almost 4000 rubles
(about $156). Therefore, it can be assumed that, on average, some 40
million Russian retirees, live in serious poverty. In the meantime,
inflation and increases in municipal payments will probably absorb the
promised 65% increase in pension payments, under consideration in the
3-year budget plan.
Italy: Italian
Unions Agree to Government Pension Plan (July 21, 2007)
According to the Italian National Statistics Institute (ISTAT), Italy
has Europe’s oldest population with 141 people over age 65 for every 100
who are under 18. Following long negotiations, the Italian government
finally approved a pension reform plan which will gradually raise the
retirement age to 60 by 2011. Sixty-year-old Italians who retire in 2011
will have paid into the state pension fund for 36 years. Even with the
current pension change, Italy will still have the lowest legal
retirement age in the European Union.
UK: Young People
Underestimating Retirement Needs (July 19, 2007)
A survey questioning more than 2,000 British people shows that the young
generation does not estimate correctly the amount of savings necessary
to ensure a happy retirement in the future. Almost half of those in
their 20s and 30s and quarter of those in 50s do not fully understand
the amount of savings needed for retirement. Responding to the concerns
of future retirees, Neil Jamieson, retail marketing and business
development director at Selftrade, says, “the message is simple: start
saving as much as possible now.” Brits should also keep track of
upcoming pension reforms which could increase the retirement age and
encourage people to save for retirement through “personal accounts.”
UK: Pension
Payout Delay 'Disgusting' (July 18, 2007)
Around 125, 000 former employees at collapsed companies across the
country have not yet received pension disbursements. For this reason the
government panel decided to create a scheme to help them out. The
Minister for Pensions Reform, Mike O’Brien, says they hope to form a
fund from the assets of all collapsed schemes and to use government
funds for a 90% disbursement to former employees. A 68-year old former
employee of Early’s, a bankrupt blanket factory, calls for immediate
action: "I'm disgusted. None of us are getting any younger. I've been
waiting three years, how much longer do I have to wait.
Russia: A Story of a Pensioner (July 17, 2007)
(Article in Russian)
A veteran of labor (a special title of honor that lingers in Russia since Soviet times), Boris Panov tells about his life as a Russian pensioner. Although he receives only $189 a month, Panov is better off than most of Russia’s retirees. Having reached the age of 80 (way above Russia’s life expectancy), he became eligible for a supplemental pension. He can now afford to buy once a month his favorite magazine–-a Russian equivalent of National Geographic. Despite hardships, Panov said aging gave him a new perspective on things and he has learned to celebrate every new day of his life.
Italy: Italy Reaches Pension Agreement (July 12, 2007)
The Italian government and the trade unions decided to increase the
minimum pension starting in 2008. Italian retirees with a pension lower
than €654 ($901) per month will benefit from an increase of €33
($45)after the age of 64. The retirement age will be also increased from
57 to 60 years. Nevertheless, the trade unions are calling for a a more
gradual increase in the retirement age
UK: Four in Five Defined-benefit Pension Schemes Shut (July 11, 2007)
The London Association of Consulting Actuaries (ACA) conducted a survey
in 2007 showing that 81% of defined-benefit schemes are closed to new
entrants into the workforce. Many companies either closed the employees’
salary based pension scheme or moved employees to less expensive schemes
as a consequence of pension deficits. ACA Chairman said that he does not
expect the employers to reverse the closures, despite the fact that many
schemes are now in surplus. Many retirees will be dependant on
means-tested state pensions in the future unless the contributions
increase or more employees participate in the risk-sharing schemes. The
future for many people entering old age in the UK looks more like
poverty.
UK: Retirement Incomes
Vulnerable to Inflation (July 10, 2007)
According to Hartford Life, the pensions of UK baby boomers are not
adjusted to the inflation rate. A survey on retirement inflation
concerns reveals that 9 in 10 consumers worry about the consequences of
inflation on their retirement incomes. Meanwhile, Capital Economics
research found that the cost of living for pensioners rose by 7.7% in
April 2007, compared to a Retail Price Index of 4.5%. Hartford Life CEO
Michael Kalen says that the boomers should start planning how to protect
their pensions from the negative effects of inflation.
Turkmenistan: Pension
Reform Falls Short of Expectations (July 9, 2007)
In 2006 the president of Turkmenistan, Samurmat Niazov, revoked the
pension rights of 100,000 retirees, using the lack of sufficient pension
funds as an excuse. The new president, Gurbanguly Berdymuhammedov, has
restored the pension rights guaranteeing a minimum state pension for all
the retired Turkmens over the age of 57 for women and 62 for men. News
Briefing Central Asia, which draws comments and analysis from a broad
range of political observers across the region, applaud the government’s
new welfare code, they also call for compensation to cover the period
when the government suspended state pensions. “This shows that the
current reforms are half-hearted and suggests that they will not be
sustained,” said Tajigul Begmedova, head of the Turkmen Helsinki
Foundation for Human Rights, an émigré group based in Bulgaria.
UK: Young Adults Fail to Learn Lessons
of Pension Crisis (July 4, 2007)
Recent research based on 2,000 UK adults found that two-thirds of young
adults do not plan to save for the retirement while they are young.
Conversely, 27% of people over 55 expressed fear of relying solely on
the pension fund, and one in five believed that they will likely need a
part-time job after retiring. Kirsty Macpherson, spokeswoman for
financial services firm Tomorrow, said, “Despite warnings from the
government over the pensions gap and the plan to raise the state
retirement age, the UK’s twenty-somethings are still not aware of the
dangers of planning too late for their retirement.”
Russia: a Nation of
Pensioners (July 2, 2007)
Russia has the most rapidly aging population compared to any other
European country. Russia’s Pension Fund is already in deficit but social
obligations continue to increase. Tax revenues are not enough to pay the
pensions resulting in an income-replacement ratio of only 24.2%. Federal
allocations constitute 53.3% of the Pension Fund budget for 2007 which
suggests that the decrease in government revenues will significantly
affect the pensioners. Further pension increases at the expense of the
budget will distort the whole system by 2010-2020, the time when the
pension load on the national economy will reach its peak. Possible
solutions are to increase taxes or the number of taxpayers. An increase
in the average age for retirement might also be considered, but the
latter has little likelihood to be approved by the public because of the
short life expectancy of Russian workers.
Turkmenistan: Turkmen Government Returns Social Welfare to Pensioners (July 2, 2007)
(Article in Russian)
Turkmenistan’s new president, Gurbanguly Berdymuhammedov, re-introduced a social welfare code, thereby returning pensions to about 100,000 retirees, payments deprived by the previous regime. Thanks to the code, other pensions, also significantly cut under the late president Saparmurat Niyazov, increased to at least $96 per month, which is ten times the previous amount.
Russia: More than 200 Elderly in Dzerzhinsk Do Not Receive Pensions on Time (July 2, 2007)
(Article in Russian)
More than 200 retirees with disabilities in the city of Dzerzhinsk, Nizhegorodsk Oblast, do not receive pensions on time due to the work overload of nurses certifying the disability. According to the local Pension Fund manager, the certification process starts late, and “the most vulnerable category of pensioners – the disabled – have to get by without pensions for two to three months.”
UK: Pension Complaints Rise
Sharply (June 28, 2007)
The UK Pensions Advisory Service (TPAS) reported that complaints about
pension administration increased by 15% in the past year. Personal
pension complaints rose by 43% due to customer service dissatisfaction.
The chief executive of TPAS said they may consider regulatory measures
if the pension providers do not improve their service.
Ireland: Older Age of Retirement
'Answer to' Pension Woe (June 26, 2007)
A labor conference announced yesterday that an aging population
jeopardizes long-term economic growth in Ireland. Economists claim that
by 2036 over 40% of the Irish workforce will be over 50 years of age.
The Irish government is consequently encouraged to root out
discrimination against the aged in the workforce and support people who
choose to work beyond retirement age.
UK: Pension Plans: How Will the New
Personal Account Pension Scheme Work? (June 25, 2007)
According to a recent UK report from the Department of Work and
Pensions, four out of five citizens have welcomed proposals for a
National Pensions Saving Scheme, or Personal Accounts scheme. The
government plans to introduce these schemes as part of the pension
reforms in 2012. Employers will be obliged to enroll employees into an
existing pension scheme or a Personal Accounts scheme. Personal Accounts
are primarily designed for people without access to workplace pension
schemes. It is expected that the package of initiatives should increase
the number of people saving for retirement in the UK. However, some fear
that employers may reduce pension contributions to the basic minimum
required by Personal Accounts.
Europe: MEPs Agree to Watered Down
Pension Plan (June 20, 2007)
The European Parliament has tried to vote for EU-wide minimum standards
for supplementary pension rights. Parliament wanted to make it easier to
change jobs across borders, effectively encouraging the mobility of EU
workers within the member countries. Nevertheless, the European
Commission has adopted a law with little resemblance of the original
proposal avoiding the portability of pension rights.
Romania: Romanian Retirees Protest Low Pensions (June 19, 2007)
(Article in Russian)
Thousands of Romanian retirees took to the streets of Bucharest and other cities to demand higher pensions and free healthcare. The average pension in Romania is 45% of the average salary.
Russia: Will Pensions
Catch up with Prices? (June 9, 2007)
(Article in Russian)
The average labor pension in Russia today is less than the minimum wage. Russian MPs promise to give the pension a 65% boost by 2010, but the question is whether the pension increase rate will exceed that of rising prices.
Russia: Consequences of Population Aging (May 31, 2007)
(Article in Russian)
According to Russian demographics specialist Gayane Safarova, western societies’ approach to population aging, for example, increasing the retirement age, is inappropriate for Russia. First, Russian pensioners have low life expectancy, and, Safarova says, it is a sacrilege to take away those few years from their deserved rest. Second, Russian grandparents traditionally have a leading role in taking care of children. Younger couples would be more reluctant to have children if they could not count on retirees in the family to look after the kids.
Russia: Yugra Pensioners to Regain Right to Free Transportation (May 28, 2007)
(Article in Russian)
Officials in Russia’s Khanty-Mansi Autonomous Okrug decided to give pensioners back their right to free public transportation. Previously, Russia sought to set a monetary charge for such benefits as free medications and transportation. The local parliament members are now debating whether to offer this benefit in summer only or throughout the year.
Russia:
Agricultural Workers Most Vulnerable (May 21, 2007)
(Article in Russian)
According to a Pskov pension fund regional manager in Russia, almost 300
businesses in the region fail to make the obligatory social security
contribution toward their employees’ future pensions. Because of this,
more than 4,000 workers, mostly employees of agricultural companies, will
be unable to claim the social security part of the pension. More than
70,000 pensioners in the Pskov region currently receive a monthly pension
of less than $100. Another 6,000 live on the minimum amount of $62/month.
Russia: Pensioners in Yakutia Continue Hunger Strike (May 17, 2007)
(Article in Russian)
Pensioners in Yakutia, northern Russia, continue the hunger strike they started on April 19, when their local pension fund refused to pay them increased pensions. About 10,000 pensioners in the region are entitled to pensions with an increased coefficient of 1.7. So far, 55 people took part in the strike.
Netherlands: Holland “Will Work Until 65” – Ministry (May 2, 2007)
A Dutch survey shows that they are more willing to keep working until the official retirement age – 65 years old, up 5% compared to the previous year. While the government has tried to limit early retirement, minister of Social Affairs Piet Hein Donner notices that, now, minds are changing. He points out that, even though some pension schemes still allow transitional early retirement to participants born before 1950, there’s a new ABP ‘choice scheme’ as of 2011. This ABP plan will allow retirement between the age of 60 and 70 and the latter group will receive a more proportionally generous pension.
United Kingdom: Michelin May Slam Brakes on
Pension Scheme (May 1, 2007)
The famous French tire maker announced that the companies’ directors
will discuss closing the company’s final salary pension scheme, known
elsewhere as a defined benefit pension. Michelin had already closed its
final salary scheme to new workers three years ago. But now it proposes
to close the pension scheme to all employees. Employees who contributed
to this system for many years will be transferred to a defined
contribution scheme. The company explained its decision by pointing to
the liabilities it had accumulated in recent years. Now the managers who
incurred those liabilities want protection from a drop in the value of
their investments such as shares. And they will transfer that risk to
new pensioners. A sorry tale!
European Union: MEPs pension scheme inquiry (April 30, 2007)
Public watchdogs are looking at bad management practices among the European Members of Parliament (MEPs). They are accused of using their office payments to get a free second pension on top of their national schemes. Interestingly, the European Parliament's bureau voted against publishing the list naming the 475 MEPs who benefit from such a pension scheme. This illegitimate perk is estimated to be worth £8 million every year.
Russia: Russia is to Launch a New
Mechanism for Raising Future Pensions (April 28, 2007)
(Article in Russian)
Russian finance minister Alexei Kudrin announced that beginning 2008 Russia will launch a new mechanism to increase future pensions. The minister promised that the main part of the pension for three years will increase by a total of 65% through creation of an accumulation fund. The parliament is expected to pass
a law to this effect in the next few months.
Russia,
Yakutiya: Pensioners in Yakutia are on Hunger-Strike (April 21, 2007)
(Article in Russian)
On April 19 twelve pensioners of Berkakit village, Nerungrinski
district of Yakutia, went on a hunger-strike. They took these extreme
measures due to the regional Pension Fund’s refusal to obey the Court
decision and convert the pensions in this region according to the
coefficient 1:7.
Russia: Experts Suggest Implementing State Welfare Payment on Old Age
(April 20, 2007)
(Article in Russian)
Konstantin Ugrumov, the Chairman of National Non-state Pension Funds Association, suggested: “The State might take responsibility for the basic part of the pensions making the welfare payment on old age, and using the rest of the financial resources to stimulate
citizens’ participation in a voluntary cumulative pension system.” He provided his arguments for this approach during a conference on the “The role of non-state pension provision in Russia pension system.”
The
Netherlands: Sharing Risk: The Netherlands' New Approach to Pensions
(April 2007)
After 2000, the Dutch adopted a “mixed” system of pension plans
that combines features of defined benefits and defined contribution plans
to remove some risk from employers and “share” it with employees as
well. Read this report for a full description of how the plan works.
UK: Help
Is at Hand (April 19, 2007)
Gordon Brown, Blair’s Chancellor of the Exchequer, faced a vote of no confidence concerning the recent pensions affair. The Conservative party opened this crisis to force Mr. Brown to explain his 1997 decision to cancel a pensions tax break. Apparently, Brown ignored warnings that ending dividend tax relief would devastate pension schemes. People, who have been affected when their firms went bust afterwards, are no longer being left out but are entitled to 80% compensation. This attack from the Conservatives seems only political and indignant since the pension system was “destroyed” well before Mr. Brown.
Czech Republic-Slovakia: Czechs, Slovaks to Cooperate on Pension Reform
(April 5, 2007)
The Czech and Slovak Labor Ministers met to prepare a Social Security
agreement that will respond to the separation of the former
Czechoslovakia into two states. Current Czech retirees used to work in
firms based in Slovakia. Now they receive lower benefits than if the
Czech Republic had paid their pension. Indeed, following the
Czechoslovakia separation, Slovakia turned out to have lower wages and
higher unemployment than did the Czech Republic. Both ministers intend
to regulate the provision of old-age pensions and to agree on a common
Labor code.
Romania: Private Pensions Ready for Launch
(April 5, 2007)
Romanians are creating a private pension system very quickly. Collection
for compulsory private pensions (second pillar) will start in August.
The first contributions to optional private pensions (third pillar)
should be allowed by May. The private pensions are regarded as “a second
salary for 2 million employees” according to a seminar recently
organized by ING Life Insurance and a Romanian newspaper. The compulsory
private pension fund will make its debut in August. Private companies
hawking such pension funds will likely harass Romanians until November.
Did the Romanians review of the sad history of the private pension
system of Chile before moving forward with this model?
UK: Head to head: Property or pension? (March 27, 2007)
Two experts discuss whether “people should forget about saving in a personal pension fund and just put their faith in bricks and mortar instead.” Real estate can be a safe long-term investment, but many worry that they will not get many benefits: this was the case following the housing crisis in the 1990’s. People must also remember that taking out a loan to buy a home can also be expensive—repaying the loan plus interest. Eventually both experts recommend against real estate as the sole retirement income option: “a spread of assets is a much more sensible idea.”
France: “Who Will Pay Our Pensions?” (March 23, 2007)
(Article in French)
This article records the testimony of two retired factory-workers. As the French presidential elections approach, they both wonder which candidate will be the
more able to maintain the pay-as-you-go pension system based on solidarity between generations. The first worker, who was a trade union militant, regards “the loss of politicization” –even in the left wing parties- as a danger and fears the growing strength of hedge funds. The second worker, who belongs to an immigrant family and worked as a miner, points out that many people have contributed all their lives to a pension system that will not be sufficient to cover future health expense.
Turkmenistan: New Turkmen President Restores Pensions to More Than 100,000
(March 19, 2007)
Former Turkmen President Saparmurat Niyazov cancelled pension payments to more than 100,000 retirees. He invoked budget reasons for the arbitrary decision. Under the new President’s rule, the new Code of Social Guarantees restores pensions and re-establishes maternity and sick benefits. It is also intended to increase the pension amount; the minimum pension in Turkmenistan is currently about US$12 per month.
Russia: Pensioner is
Not Dependant (March 16, 2007)
(Article in Russian)
According to the All-Russian Center of Life Level (ARCLL), the pensions of 15-19 million Russian people are below of living wage. How much money do Russian pensioners need for a decent existence? Where can the State find the money for this support? Vaycheslav Bobkov, Director of ARCLL, Doctor of Economics, Professor, talks about these critical issues.
UK:
Think Long Term, Gore Tells Pension Funds (March 15, 2007)
Former US vice-president, Al Gore, spoke at the annual investment conference of the National Association of Pension Funds in Edinburgh saying that short-termism in company decision-making would delay progress in tackling the carbon emissions causing global warming. In his speech, Mr Gore produced an array of statistics showing how the investment community, backed by pension fund money, was encouraging company executives to reject investments that failed to improve short term profits. Pension funds have long-term goals and should be managed as such rather than worrying about short-term gains.
Italy: Italy Government to Meet Unions (March 14, 2007)
The government agreed to meet with union leaders and the employers' association Confindustria on March 22. They will mainly discuss the calculations for the retirement age and pensions. The unions have agreed to accept the hike in the retirement age; in exchange, the unions want the government to “freeze for a few years talks on the reduction of coefficients with which it calculates pension payments.”
Germany: German Parliament Increases Retirement Age (March 9, 2007)
The decision to increase retirement age is part of Chancellor Merkel’s reform program in which she
promised “a revamp of health care and the labor market.” Opposing the government’s arguments--to keep people in jobs longer in order to counter the demographic effects--trade unions demonstrated to denounce a “counterproductive” law. They claim that, instead of solving the problem, raising retirement age will increase unemployment and consequently poverty among the elderly.
Sweden: Sweden’s Pension Antidote Finds a Global Audience (March 5, 2007)
The Swedish pension model, which encourages its citizens to retire later on in life, may now be implemented elsewhere around the world. Though the program encourages many to retire later on in life, experts say that it places the ‘burden of aging’ on the individual rather than on the society.’ In other words, the system does little to alleviate income inequalities, thus allowing those who make more during their lifetime to receive a larger pension. The World Bank officially endorsed the idea, claiming that it could serve as a model for pension-systems worldwide. However, the overall effectiveness of such a program (or lack thereof) is difficult to determine given the fact that the program is only eight years old.
Spain:
Fifty-seven percent of Persons between 55 and 64 Years Old Are Unemployed
(February 27, 2007)
Article in Spanish
Almost 3/5 of the pre-retirement population is unemployed. What happened? Many companies want to make-over their staffs, replacing older employees, considered as hindrances, with younger employees who have better skills for competition in today’s market. While there are pre-retirement workers
who find early retirement offers attractive, many were forced to leave their jobs, where they have been working for scores and decades, much earlier than they anticipated. This practice is discriminative and undignified because
it leaves these near-retirees with low self-esteem and a sense of unworthiness, which can cause damage to their health and well-being.
Cyprus:
Cypriot Pensioners on the Poverty Line (February 21, 2007)
An EU report says that many older Cypriots live in poverty. Compared to the European 16% average, older Cypriots face a risk of poverty as high as 51%. However the government doesn’t plan massive pension increases over the coming years since the social insurance fund is relatively new in the country. The Labor Minister said that Cypriots can rely on “additional assistance” from the Welfare Department, and that the EU conclusions are alarmist only because they looked at the sustainability of public finances. Yet trade unions, including the Pensioners Union, have suggested the possibility of setting up a “minimum income or to develop a second pillar with defined-contribution provision.”
UK: High Court Victory for Pensioners (February 21, 2007)
A High Court has ruled that the British government is guilty of maladministration. Some 85,000 people lost their public pensions when the firms they worked for went bust between 1997 and 2005. However the Court decision doesn’t compel the government to compensate them for their loss. The government doesn’t intend either to pay full compensation estimated at £15bn. The opposition has immediately reacted to the High Court decision and proposed “amendments to the Pensions Bill calling for compensation.”
Italy: Italian Workers to Put about 25 Percent Severance Pay in Pension Schemes (February 6, 2007)
Half of Italian workers currently favor leaving their severance pay fund with the company where they worked. Beginning June 30, the government plans to take control of those funds and may direct the allocation toward private pension funds. Asset management firms are hoping to increase their pension fund business via this change. And the workers’ desires?
Russia: Pension Reform Prompted to Retire (February 2, 2007)
Russia’s Health and Social Development Ministry proposed to change the national pension fund into a two-level pension system. The first component will stay as a pay-as-you-go system operated by the government. As for the second component, the State wants to give up its responsibility and leave savings to the individual’s responsibility.
Tax benefits will encourage the creation of a private pension savings program that will not be mandatory.
Switzerland: Aging, Asset Allocation, and Costs: Evidence for the Pension Fund Industry
in Switzerland (February 2007)
This International Monetary Fund report analyses the Swiss pension system demonstrating the aging population’s impact on pension funds’ investment behavior. Switzerland has a mandatory and funded occupational (“second pillar”) pension system. It appears well-prepared to face aging demographic challenges. In Switzerland workers’ benefits tend to be more strongly invested in real estate, which provides regular and less volatile cash flows in order to meet payment
obligations.
France:
Mechanisms of Demographic Compensation for Aging (January 2007)
(Report in French)
This French Senate report tackles a tricky and technical topic:
compensation, which is the base for the French pay-as-you-go pension
system. After World War II, new governments failed to implement a unified
pension system and several autonomous programs remained for farmers,
railroad and craft workers, etc. In 1974 lawmakers enacted legislation to
counter the imbalance due to the baby-boom. The goal was to offset the
accounts of all pension programs: some professions have a positive ratio
of workers to retirees while others don’t and are in deficit. However,
there will be great difficulty managing this varied compensation mechanism due
to expected massive retirements in the coming years.
EU: Requesting Delay in Retirement Age
(January 29, 2007)
(Article in Spanish)
The World Economic Forum recommended to the European governments and corporations that they delay the age for retirement to compensate for the reduced workforce and reduce the expanding aging population. The German government is first to take measures to resolve this issue with plans to extend the retirement age from 65 years old to 67 years old, a move that is unpopular with its citizens. Conversely, the French Minister of Commerce believes that the European population has accepted that older people will have to work more years to save reduce pressures on pension systems brought on by longevity.
Ireland: Labour Court Asks Bank of Ireland to Re-Open DB Scheme (January 25, 2007) The Labour Court required the Bank of Ireland to offer an option of a Defined Benefit pension scheme for new staff hired after October 1, 2006. An agreement about a Defined Benefit/Defined Contribution hybrid scheme failed after discussion with the unions. Several Irish companies have already implemented this pension arrangement, stating that the hybrid scheme is “more generous than others systems on the Irish market.” The unions reject any such proposal and denounce the bank that could still afford a Defined Benefit scheme but closed it to take less liability.
Russia: Pension Money Is Stolen (January 23, 2007)
(Article in Russian)
The police forces of Kabardina Balkariya found out that large amounts of
Pension Fund money disappeared during the construction of the more than
10 buildings that belong to the Federal Pension Fund. The investigation
showed that the construction companies reported that they used more
money to build construction projects than was true. It is not the first
time that criminals steal from the most vulnerable and unprotected
social group. Those who took pension money, obviously, do not count on a
pension when they grow old.
Netherlands: Think-Tank Puts Pension Bill at €11bn (January 15, 2007)
The Dutch political parties, as they form a new coalition government, are considering part-taxation of the contributions that workers pay to a public or a company fund. The Dutch think tank, “Bureau for Economic Policy Analysis,” (CPB) has influenced those discussions, since it now believes that the expenses of longevity will be higher than expected. According to its study, the government should decrease its expenses by 11bn euros over the long term in order to fund coming aging costs.
France: Strauss-Kahn
Doesn’t Want a New Tax to Finance the Pensions (January 14, 2007)
(Article in French)
As the socialist party’s program takes shape, so does candidate Segolene Royal’s. A former socialist Finance Secretary, D. Strauss-Kahn, has been asked to study possible pension changes. He noted that the specific systems, which work well for certain professions, do have to be reorganized. However
the State, employers and trade unions must decide on changes through a common agreement. He denounced “those who want to reform with political decrees without any consultation.” He opposes adding new taxes but would raise the retirement age for the less physically arduous jobs.
Poland: New Law in Poland Is Aimed at Former Secret Police Agents (January 12, 2007)
In the light of the scandal about the Roman Catholic Church’s affiliation with the Sluzba Bezpieczentwa, a Communist-era secret police, Polish Prime Minister Kaczynski promised to seek a new law that will exclude former secret police agents from working for the government, leaving them with reduced or no pensions. Is cessation of an earned pension an appropriate punishment?
UK: DB Schemes in UK ‘Will Die Out by 2012’ (January 11, 2007)
Companies in the United Kingdom are developing DC (defined-contribution) pension schemes for their new employees. The trend is clearer in the financial services sector where no DB (defined-benefit) plans were offered last year. Overall in 2006 only 21% of the corporate pension plans were defined-benefit plans. Employees who benefit from those DB plans have better retirement coverage since the employer must contribute to their pensions. Yet more companies plan to privatize their pension systems which will likely encourage more employee turnover. It seems that a worker confident about an adequate retirement is less important than extracting ever greater profits for the boss.
UK: New BA Pension Details Revealed (January 8, 2007)
In response to a pension deficit, British Airway has reached an agreement with its union after nine months of negotiation. The new deal, which is outlined in the article, will affect nearly 34,000 flying crew and ground staff. Effective in April, the new deal will allow employees to have the option of when they want to retire. That information will
determine how much money will be deducted from their paychecks.
France: Retirement:
Questions and Trends for 2008 (January 2007)
(Report in French)
The Pensions’ Trends Council (COR) discusses the “2008 appointment” that French must meet following the significant changes made in 2003 in the French pension system. The report reaffirms the choice of a pay-as-you-go defined-benefit scheme as well as equity between all specific
pension programs. To attain the 2008 goal –which is to increase pensions - the age retirement must be raised, and a minimum pension may be implemented. The report defines France’s room for maneuver, from an economic and financial point of view. The report also evaluates pension systems implemented in other countries (such as the drastic changes in Sweden or Italy) for what France might find applicable.
Armenia: Towards Social Justice:
Pension Reform in Armenia (2006)
Armenia, similar to other former Soviet countries, still faces a challenge
of adapting to a market economy. The current social system confronts major
shortcomings resulting from the deficiencies of a legal and institutional
base. The basic pension in Armenia is several times lower than the national
minimum subsistence. Mandatory social contributions constitute 22% of an
average salary and 20% on a salary double the average, while the monthly
pensions are 19% of a salary for an employee on an average salary and 9% for
an employee on salary double the average. Meanwhile, the pensions do not
depend on the amount of social contributions made throughout the employment
period, which distorts the incentive to make social contributions. This
underlines the necessity to implement social reforms in Armenia.
Return to Top of Page
Middle
East
& North Africa
Iraq:
The Dignity of Senior Citizens in
Iraq
is a Casualty of the Occupation and the Deteriorating Situation (June 19,
2007)
(Article in Arabic)
Hajj Khalil, aged 72, was a school teacher for 35 years only to
discover that his pension would only last him a few days. “I was really
depending on it- I thought that it would be cover all my needs and the needs
of my family. I still support my wife and children, who are also facing this
difficult situation.” Hajj Khalil is not alone in his predicament; in
fact, since the war started in 2003, many elderly persons have found that
their pensions have all but dried up. Hajj Khalil now works as a street
peddler, selling toothpaste. Many other older Iraqis have resorted to
re-entering the work force in hopes of putting food on the table. Even then
conditions are difficult; the average Iraqi income today does not exceed a
few dollars per month, making
Iraq
one of the poorest countries in world. “Do not ask me how I get my food
and water,” says a retired woman who worked as a principal in one of
Baghdad
’s most famous elementary schools. “I am so ashamed,” she added, as
she began to tear.
Palestine
: Retirement Workshop Takes Place in
Hebron
(June 12, 2007)
(Article in Arabic)
The organization for Civil Rights organized a workshop on the rights of
the elderly in retirement. Participants were informed of their various
rights and the qualifications they must meet to receive benefits. They also
called on the government to enact the law that deals with retirement and
pensions--clause 121 number 7--that was passed in 2005.
Morocco: Secretary F. Oualalou’s Alarmist Words
(March 12, 2007)
(Article in French)
During a March meeting organized to discuss the fact that the public service’s pensions would be reformed,” the Moroccan Finance Secretary, Fathallah Oualalou, denounced the implicit debt of the pension funds. This debt, namely the difference between their commitments and their real financial reserves, would border on the amount of the national GDP. The Secretary used such alarmist remarks to urge quick decisions in the pension reform process. If no steps are taken quickly, Moroccans retirees will have to make more sacrifices and the budget balance of the pension funds will be threatened.
Morocco: A System of Complementary Pension is Necessary (March 20, 2007)
(Article in French)
Despite an apparently good organization for its retirement system, only 21% of workers earn a pension. Yet, Morocco has compulsory public pension funds, a compulsory program and an optional one for the private sector workers. Government and unions recently proposed to “turn the optional program into a system of complementary pension following the principles of the National Fund of Social Security (CNSS).” According to them, “providing complementary pensions should be the companies’ responsibility towards its employees.”
UAE: Retired People Should Also Get Increments, Says NCC
(February 14, 2007)
In
view of the spiraling cost of living and ongoing inflation, the National
Consultative Council (NCC) has urged that retired people must get the same
increments the government has introduced for public servants.
The NCC suggested devising a policy to evaluate and assess pensions
in accordance with the inflation rate to make sure that the high cost of
living does not affect retired people negatively. It proposed that the
salary ceiling of 80 per cent should be discarded to allow retirees to
receive a higher pension in accordance with his/her service duration.
Return to Top of Page
Global
World: Report: Social
Security Coverage and the Labor Market in Developing Countries (August
2007)
(PDF format, 46 p.)
The following paper discusses the reasons for low coverage of social
security programs in developing countries. The report estimates the
degree to which low participation is caused by involuntary rationing as
well as the degree to which it is attributable to lack of willingness or
ability to contribute to old-age pension programs. The report compares
contribution patterns between two categories of employees--employees
whose participation is required and self-employed workers whose
participation is non-compulsory. The results show that for both
categories of workers, on average 20-30% variance in participation
patterns is due to low willingness to contribute to old-age programs.
Meanwhile, the report finds that there are numbers of employees who are
rationed out of social security against their own desire as a result of
failure to find formal jobs with benefits.
OECD: Report: Pensions at a Glance: Public Policies across OECD
Countries (2007)
The Organization for Economic Cooperation and Development (OECD) study,
“Pensions at a Glance,” delivers an updated comparison of pension and
retirement policies across OECD countries. The review presents
country-specific analytical data making it a useful source. Italy ranks first for the
highest public spending on pensions among the 30 OECD countries. Italy
spent 13.9% of GDP on public pensions in 2003 in comparison with 7.7 %
of GDP for the average. Austria,
Portugal and
Poland are also included in the list
of the most generous countries in terms of public pension spending. The
current "reforms" in most of these countries aim to cut the
retirement benefits considerably. The OECD report reveals that the new system may
increase the income gap between the low and high earners, thereby
increasing old-age poverty. Germany, France and Japan have already
cut their benefits by 15-20%. Moreover,
Germany has moved the retirement age beyond 65. The new private
pension plan in Germany is supposed to compensate for the reduction of
public benefits. Conversely, the UK
has the lowest public pensions, almost half the net replacement rate in
Italy and Spain.
World: Report: An
Evaluation of World Bank Research, 1998 – 2005 (September 24, 2006)
(PDF Format, 165 p.)
After asking a group of economists to prepare an independent evaluation of
the World Bank research activities between 1998 – 2005, the Bank has made
the findings public. The findings show that the Bank selectively used
research data to advocate its policies and projects. The report criticizes
the pro-privatization bias of the Bank’s “pension reform” which clearly did
not inform the Bank’s principal mission to understand development policy.
The evaluation also highlights the necessity to monitor and evaluate
the research on a more frequent basis.
World:
The Case for a Global Pension and Youth Grant (May 2007)
In this paper, Robin Blackburn, Professor for Economics at the University of
Essex, England, and the New School for Social
Research, in New York, suggests the creation of a Global Pension and Youth
Grant, to combat poverty. In addition to identifying the needs for such a Grant,
Blackburn
also proposes financing options, showing that establishing the Grant indeed
lies within financial and technical reach for our globalized world.
The paper is based on a presentation
Blackburn
gave during the event, “Disappearing
Pensions in Rich Countries,” organized by
Global Action on Aging, at the 2007 UN Commission for Social Development.
World: Hedge Funds: Angels or Devils? (April 3, 2007)
(Article in French)
Michel Prada, president of the French equivalent of the American Securities Exchange Commission, declared that hedge funds (used to invest in stock exchanges for future pension benefits) are necessary to regulate the market: “they turn peaceful managements upside down.” Some economists suggest that hedge funds act as regulators and can save underestimated companies. Yet other experts claim that hedge funds can make stocks fall. The mini crisis of February 2007 seems to confirm the accusation of short term speculation.
World:
Major Developments and Trends in Population Ageing (February 7-9, 2007)
Life expectancy varies in different countries and regions of the world. People in Japan are more likely to live longer than people in Africa. Two developments converge to create this new situation. In this demographic transition, the mortality rate is higher than birth rate. Therefore there are fewer younger people replacing the older generation. Another development is that life expectancy is getting longer. This will impact the dependency ratio. Although the world’s total dependency ratio will not change, the ratio of elderly persons over the age of 65 and the younger persons under the age of 15 will change. Older persons’ pension income largely depends on the workforce population. With the disproportional ratio of pension supply and demand, this can create a serious crisis if governments fail to take corrective action.
World:
Should Old-Age Benefits Be Earnings-Tested? (February 2007)
This German Institute for the Study of Labor (IZA) paper analyzes the “welfare effects of earnings testing flat-rate old-age benefits” in a Beveridge system, the universal old age benefit system implemented in the UK. The authors ask “whether benefits should be paid to everyone above a certain age or only to those with no or low wage income,” i.e., with or without an earnings-tested condition? This report relies on a scientific and microeconomic analysis and on Rawl’s theory of justice about the positive effects of redistribution in order to promote a redistributive social security with flat-rate benefits.
World: Global Aging and the Sustainability of Public Pension Systems (January 2007)
The Report discusses efforts of certain developed countries (such as the United States, Sweden, France, Australia, et al) to prepare for their coming age waves and in particular, to change their public pension systems. The Report compares their pension systems, their legal and cultural background and the recent developments. The Report favors partially privatizating public pensions systems in a variety of ways. In short, it urges changes that might increase pension levels but runs the serious downside risk of greater instability and financial loss for retirees.
Return to Top of Page
|
|
