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Pension
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-Archives 2007-
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Africa
Kenya: State to Stop
Free Pension Plans for all Civil Servants (December
13, 2007)
The Kenyan government adopted a new contributory pension
scheme: Kenyan civil servants will have to pay for their
own pensions beginning in the next financial year. The permanent secretary
in the finance ministry, Joseph Kinnyuas, announced that
state employees will have to participate in the fund.
Rural civil servants fear this new scheme as they have
only little knowledge of private investments. Will the new
program help or harm government retirees in Kenya?
South
Africa: Pension Funds Time Bomb (November 18, 2007)
The recent Fidentia scandal has prompted the South
African government to introduce measures to curb
mismanagement in fund pensions. Pension fund expert
Henry Dul says that about R75-billion in annual pension
contributions by 9.2 million members is effectively
placed in the hands of a few thousand people who lack
expertise and training in this area.. According to Dul,
South Africa’s 13,000 pension funds are managed by ‘busy
or ignorant’ people who are jeopardizing the income of
current and future retired South Africans.
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.
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Americas &
Caribbean
Reports
| Articles
Reports
Peru: Intergenerational Transfers
and Demographic Transition in Peru: Remittances,
Old-Age pensions, and Future Challenges (October 2007)
Family solidarity remains a traditional value in Peru.
Families live together in the same house and share
incomes to help children and the vulnerable elderly.
But, this model faces changes due to the demographic
transition and the effects of increasing migration of
the young.
Peru: Peru Starts
Allowing Movement from Private to State Pensions
(August 28, 2007)
After long debate among different political parties,
Peru’s government finally announced that it will allow
the transfer of funds from private pension funds to the
state pension system. The administration of the previous
president did not favor the bill, claiming it would be
costly for the state. However, the current president
favors the bill as he promised the pension holders back
in 2006 to allow them to change plans. "I think that of
the hundreds of thousands of retirees, at least 200,000
will be able to change pensions over the course of
time," said the President of the nation's office of
Superintendent of Banking, Insurance and Private
Pensions.
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.
Latin America: Pension Systems in Latin America:
Concepts and Measurements of Coverage (November 2006)
Evaluators of pension systems often look at three
dimensions: The first involves the extent of coverage,
that is, the proportion of protected older persons. The
second one focuses on adequacy or how well do the
benefits meet the consumption level or needs of
pensioners. Finally, the third spotlights the
sustainability of the system. This report on Latin
America focuses on coverage and offers helpful
informational to understand pen in both the public and
private sectors.
Articles
Bolivia: Bolivians Pass
Dignity Pension (November 28, 2007)
On November 28, the Bolivian government adopted the
Universal Old Age Law providing pensions for the
elderly. Bolivian Congress Speaker Alvaro Garcia
publicly announced the approval of the measure that
provides 200 Bolivian pesos (about 25 dollars) per month
for people over 60 years of age. After many protests and
marches in support of the law, Bolivians cheered news
about its adoption.
Mexico: An Embargo Will be
Placed on People Owing Money to Pensions (October 25,
2007)
(Article in Spanish)
This embargo will put a tough burden on the backs of
workers due to the fact that there is a debt of 15
million pesos to the pension fund. The State assured
that all pensioners will receive the pensions despite of
the debt. Measures are underway to prevent such a debt
of this size to accumulate again.
Argentina: The Argentinean
President Forces Pension Funds to Be Used in Argentina
(October 19, 2007)
(Article in Spanish)
The Argentine President is forcing the administrators of
elder and other pensioners’ funds to reduce their
foreign investments from 10 to 2 percent. Right now most
of the funds are invested in Brazil, estimated at
2.515,7 million dollars. The president believes the new
policy will boost the local Argentine economy.
Bolivia: A New
System of Pensions Might Substitute the Old “Bonosol”(
October 14, 2007)
(Article in Spanish)
The Executive Branch will present a project to the
National Congress to benefit people older than 60 years
old. The beneficiaries could receive 200 Bolivarianos
monthly (US$26.65). The program, if enacted, would
replace the “Bonosol.”
Colombia: $543.198
Million for the 2008 Budget of the Meta Region Waiting
for Assembly's Approval (October 8, 2007)
(Article in Spanish)
The pensioners’ fund in the region of “Meta” is
scheduled to receive 12,500 million pesos (6,119,951 US
Dollars) depending on the decision of the Assembly on
November 15, 2007. This decision will also mean that
34,986 million pesos would be allocated to the health
sector.
Paraguay: Pensioners from the Interior Will Claim
(their pensions) at ATM Machines Starting this Month
(October 3, 2007)
(Article in Spanish)
Beginning in October 2007, pensioners in Paraguay will
be able to retrieve their pensions through the “Infonet”
network of ATM machines. The improved accessibility of
pensions will help people, especially those living in
remote areas of the country.
Argentina: It’s the Time to
Receive for Grandparents (September 27, 2007)
(Article in Spanish)
All elderly people from Buenos Aires province will
finally receive a pension as of September 28, 2007. This
change will start with those who already receive social
pensions and will continue forward to benefit all
elderly people.
Paraguay: The Parliament never
addressed the demand for pensions for housewives
(September 2007)
(Article in Spanish)
For four years, la Asociación de Coordinadoras de
Amas de Casa (ACAC) in Paraguay has lobbied the National
Parliament to pass a law providing housewives with
pensions after 60 years old. The group, whose efforts
have made little progress, consists of middle- and
lower-class women who fear their opinions will be
ignored as a result of their economic status. Enrique
González Quintana promised four years ago, when
the proposal was first presented, that he would support
the efforts of the ACAC if he were to become President
of the National Congress. However, after assuming the
position, he has ignored this proposal, focusing on
other political issues.
Peru: ITF Waived for Food
Pension Payments (September 22, 2007)
(Article in Spanish)
The Executive Branch in Peru waived the “Financial
Transaction Tax” (ITF) for food pension payments
deposited into savings accounts. Those institutions
depositing the payments had to also sign a sworn
statement affirming that food pension funds only would
be deposited in such accounts.
Ecuador: Beneficiaries of
Farmer’s Insurance Give Last Ultimatum to IESS
(September 12, 2007)
(Article in Spanish)
Representatives and beneficiaries of the Farmer’s
Insurance are demanding key reforms to the EISS
(Ecuadorian Institute of Social Security). Most
important, they want a pension increase from $3 to $21.
Also, they want the EISS to pay off the debt incurred
for pensioners’ medical insurance. Beneficiaries of the
Farmer’s Insurance have mobilized before and are
threatening to do the same again if their demands are
not met.
Bolivia: Miners Armed with Dynamite Accuse Perez of
Lying to Them (September 11, 2007)
(Article in Spanish)
Retired miners in Bolivia are still entrenched in a
hunger strike and threatening to blow themselves up with
dynamite at the office of the Vice-ministry of Pensions.
They accuse the Minister of Pensions, Perez, of lying to
retired miners saying that he went back on his promise
to increase pensions from $60 dollars a month to $180
dollars a month. The minister now says that giving a
pension increase to retired miners would “put in risk
the economy of the country” and set off an inflationary
spiral. The retired miners say that they are not
terrorists but rather they are citizens and forced to
take extreme measures to claim what has been promised
them in old age.
Paraguay: No Studies of Grace
Pensions in the Parliament (September 6, 2007)
(Article in Spanish)
The Paraguay Budget Commission archived seventy-five
pension petitions because they were considered out of
date. The cases will be submitted to another court where
they are most likely to be cancelled, some for lacking
documentation. Who suffers?
Chile: Pensioners Protest at “La Moneda” (August 28,
2007)
(Article in Spanish)
Directors from the “Federación Gremial de
Asociaciones de Jubilados y Montepiadas” (Gremial
Federation of Retirees Associations) and other retirees
traveled from Valparaiso to Santiago to protest
decreases in pensions. The retiree association denounced
government deductions that discriminate against women
who get a 40 to 50% reduction in their pensions when
their husbands die. Retirees are want a readjustment of
10.6% on retroactive payments and the obligatory
extension of their healthcare.
Argentina: “Increase in the
Budget for Pension Payments” (August 27, 2007)
(Article in Spanish)
The population of retired and pensioned Argentineans
increased by 12.5% this year. Argentinean officials
decided to increase the budget for pension payments by
44.8%. People over 75 years and anyone who can prove
that they or anyone in their family has a critical
illness will receive these pensions. The budget
increased from 560 million pesos (177 million US
dollars) to 811 million pesos (256 million dollars).
Colombia: There Are Three
Million Poor Elderly Living in Colombia, and Only 2
out of 10 Who Are Sixty or Older Have Pensions (August
22, 2007)
(Article in Spanish)
There are three million elderly poor living in Colombia,
and only two out of ten aged sixty or older have
pensions. Although upper-class senior citizens may have
some form of social security, like the poor, they also
consider themselves a burden to their family and are
often lonely as a result. The director of the Ministry
of Economic Security and Pensions, Diane Arenas, states
that a national political movement on aging and old age
needs to be encouraged in order to remedy these
problems.
Bolivia: “FFAA Improves
Retirement Plan Though Salary Contributions of 2%
(August 3, 2007)
(Article in Spanish)
Any military official or sub official retiring next year
will receive an additional pay per year as part of a
military social security reform. Officials who retire
after 35 years of service will receive this benefit. The
reform is part of the broader restructuring of Cossmil
(Military Social Security Corporation), which will also
create new modern hospitals. This reform also allowed
for the identification of excessive bureaucracy,
unqualified personnel, low salaries, and for the new
structural organization of Cossmil.
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
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Asia Pacific
Reports
| Articles
Reports
Japan: Aging,
Saving, and Public Pensions in Japan (July 2007)
Japan’s population is aging at the fastest rate
in human history and is now likely the most aged in
the world. The report analyzes the impact of aging
on Japan's household saving rate and on its public
pension system.
China: Pension Fund
Investment and Regulation: An International
Perspective and Implications for China’s Pension
System (November 2007)
Researchers begin this report by reviewing how
OECD and non-OECD counties regulate pension funds.
Next, they review the existing regulatory framework
of funded pensions in China. Finally, they conduct a
simple empirical study, investigating quantitatively
the extent to which potential benefits could be
achieved if the current quantitative asset
restrictions approach in China were shifted toward a
more liberalized (for profit) regulatory approach.
They recommend a number of policies to strengthen
the existing pension regulations. The researchers
suggest removing the lower limits on certain asset
classes, and permitting pension assets to be
invested abroad. How will China protect its citizens
from the profit-hungry middle men who are investing
their pensions?
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: Basic Pension To
Increase by 280 Yuan/month (December 29, 2007)
(Article in Chinese)
At present, Beijing has an accumulative pension
scheme based on personal accounts in rural areas.
However, statistics show that only 490 thousand out
of 1.34 million eligible rural pensioners have
joined this scheme. The rural pension coverage rate
remains low at 37%; as few as 30 thousand pensioners
are receiving payments.The average payment is around
100 Yuan. Next year, the“New Beijing rural pension
scheme” and the “Beijing pension scheme for
non-social-security pensioners” will be jointly
implemented. Eligible pensioners will not only enjoy
a personal-account-based pension, but also a “basic
pension, ” that is increased by 280
Yuan/month.
China: Closing the Pension Gap
(December 20, 2007)
China’s rapidly aging society is facing several
“loopholes” in the country’s infant elderly care
system. The total capacity of 1.59 million beds in
nursing homes can only meet 4% of the demand.
Meanwhile, basic elderly care system has not
extended to rural areas. Acknowledging this, the
Chinese government has put a social security system
in rural areas back on its agenda. It will combine
home and community care with government coordination
but operated under a market model. The 2020 goal is
to provide seniors throughout China with a pension
scheme.
India: Age
no Bar for Old Age Pension (December 18, 2007)
According to this article, corrupt politicians in
India encourage pension fraud, i.e, misrepresenting
one’s age when filing for pension monies. The
politicians encourage persons under the appropriate
age to file for a pension and then work to get the
politician elected and re-elected. This corrupt
practice of falsifying age is draining government
funds allotted to pensions for truly “old persons.”
It also makes bankers and others “co-conspirators”
since they feel powerless to report the illegal act.
New Zealand: No Rise to
Pension Age (December 18, 2007)
New Zealand Government is trying to adjust its
pension system to meet the needs of increased
numbers of older persons who are living longer. On
December 17th, Commissioner Diana Crossan suggested
lifting the retirement age as much of Europe has
done. But on December 18th, the Finance Minister
Michael Cullen said that changing the retirement age
was not an option. Also, knotty dilemmas face the
popular KiwiSaver program. It encourages extra
savings during work years that will “top up” weekly
retirement payments. However, the scheme favors
richer workers and the lower- paid can’t afford to
take part, with the effect of widening the gap
between rich and poor in retirement.
Japan:
Japan Warns of Missing Pensions (December 16,
2007)
The public pension crisis in Japan continues. The
government admits losing track of pension premiums
of over 8.5 million people. Officials confirm that
they will make every effort to resolve the pension
issue and make sure the elderly get back their
pension funds by March, 2008. A dangerous situation.
China: Pension Funds Drive
Asset Management Growth (December 6, 2007)
By 2050, China’s elderly population will grow to 440
million. As society ages, China will face the
largest retiree population in the world. At present,
China is running a three-pillar pension system. The
first pillar is its old public pension provided
through mandatory contribution by employees—the
National Social Security (NSSF). The second is
private/corporate enterprise annuities (EA)--a fully
funded and voluntary contribution plan by employers.
The last pillar consists of a voluntary plan, also
set up by employers. With the rising demand for
pensions, China is making efforts to reinforce and
expand NSSF through better asset management. Through
such efforts, China hopes to raise its pension
assets by 23.1% between now and 2015.
China: 240 million People
Covered by Social Pension System (December 5,
2007)
More than 187 million Chinese people living in urban
areas benefit from social pensions. Unfortunately,
this is not the case for rural people, who represent
more than three quarters of the total Chinese
population. In rural areas, companies and individual
workers have to pay for pension funds. A new study
also reveals that the national pension fund was 631
billion yuan in 2006 and the pension payments only
came to 489 yuan the same year.
Brunei: Calls for Extension
of Retirement Age (November 27, 2007)
In Brunei, there is ongoing debate between
inhabitants and the government about the age for
retirement. With life expectancy reaching 74 years,
the issue of extending retirement age has not only
been the subject of a government probe into the
matter but has also sparked interest within several
sections of the community as well. The increase in
life expectancy resulting from advances in medicine
and better living conditions have led people to
believe that the current retirement age of 55 is too
young.
Hong Kong: Rally Seeks
Pension System for All Residents (November 12,
2007)
In a clear mobilization effort by the elderly in
Hong Kong, about 200 members of various unions
marched to government headquarters “calling for the
introduction of a better pension fund scheme for all
residents.” Union members and older people who were
present said that the current system fails to meet
their needs. Recent surveys show that 76.8 percent
of people interviewed believed the government should
implement a comprehensive pension fund scheme.
China: China Opening Pension Market to
Expert Money Managers (November 13, 2007)
China owns 90 billions yuan ($12 billion US) of
corporate pensions. The government recently issued
rules governing its pension funds, paving the way
to allow more select fund managers and financial
institutions to help manage this large amount.
Life insurers and pension firms approved by China
's insurance regulator may
offer pension insurance products nationwide. Also,
pension firms may help manage company pension
plans nationally. The rules will take effect
January 1.
Japan
: Starving to Death Because of the Debt (November
2, 2007)
Hiroki Nishiyama starved to death this summer
in Japan because he did not have time to find a new
job. He died two months after a municipal civil
servant in charge of pensions and social security
stopped giving him his social benefits. He is one of
the victims of the quotas policy, which encourages
the state employees to reduce the number of social
security and pensions beneficiaries. Japan adopted
this kind of policy to reduce its national debt.
Given that on November 29th, Tokyo is going to host
a conference organized with the World Bank entitled
’Reduction of poverty and development strategies in
the developing countries’, Hiroki Nishiyama's death
is a shame.
Australia: Call to Delay
Retirement Age to 67 Gets Short Shrift, For Now
(October 11, 2007)
Leaders from the two major parties in Australia and
a representative from National Seniors rejected a
recommendation by the Committee for Economic
Development of Australia to increase the age of
pension eligibility. The Committee argued that
raising the age of eligibility “would encourage more
people to stay in the workforce and help them
increase their retirement savings.” Those opposing
the recommendation claim that “improvements to the
superannuation system and inducements to keep
working after the age of 65 were encouragement
enough for people to stay in the workforce.”
Japan: Premier to Head
Pension Reform Panel (October 10, 2007)
In an effort to retrieve the lost records of more
than 50 million pension accounts, the Japanese
national administration found a need to tackle
pension issues as a whole. A council has been
assigned to complete the task by the end of March.
The Prime Minister will lead this council that
includes the minister of health, labor and welfare,
along with other government officials. Word of
warning to all pension holders: Maintain your own
records!
China: Most People Worry
About Finances After Retirement (September 25,
2007)
A Chinese poll revealed last week that 9 out of 10
Chinese people are concerned about how they will
financially manage in retirement. The online poll,
conducted by the China Youth Daily and Sina.com,
involved 3,871 people from across the country. Long
Yongtu, former vice minister for foreign trade, said
at a forum in the beginning of September that
elderly people mustn’t rely on government to finance
their retirement. However, China has entered in an
aging society, as 11% of its population is currently
aged 60 or above.
India: Government
Announces Pension for Elderly BPL Citizens
(September 14, 2007)
On Thursday, September 13, 2007 the Indian
government took action on important social decisions
for a number of different issues. Among them,
Manmohan Singh, the prime minister, announced the
generalization of pensions for all persons above 65
years old who live below the poverty line (BPL).
This scheme will benefit more than 15 million people
(1.57 crore). Before this reform, pensions were only
given to homeless persons. Balancing the benefit to
older persons, the government will also take
measures to improve the upper primary stage of
education.
China: China’ Income
Security for the Elderly Cannot Depend
Entirely on the Government (September 13,
2007)
(Article in Chinese)
Currently China has over 143 million people aged
60 or older, accounting for 11% of the total
population. It is estimated that in 2020 the
elderly population percentage will grow to 17%
and in 2050 to 31%. Meanwhile, China’s society
is experiencing the phenomenon of “getting old
before getting rich.” In developed countries, a
country typically enters an aging society when
its per capita GDP reaches the $5,000 to $10,000
level. However, in 2006, China’s per capita GDP
is only around $2,000. Based on the experience
in developed countries, it is unsustainable to
depend on the government to provide income
security to the elderly. Other ways of elderly
support should be explored, especially
commercial pensions which are expected to have a
significant role in China in the future.
Shanghai, China:
Tax-Deferred Pension Likely to Break the
Bottleneck of the Development of Commercial
Pension (September 12, 2007)
(Article in Chinese)
A survey indicates that over 50% of respondents
believe that investment in a commercial pension is
necessary in order to keep the same quality of
life after retirement. However, the development of
commercial pensions face serious challenges due to
issues such as currency appreciation and continued
good stock market performance in China. As an
alternative, a tax-deferred pension which will
complete its feasibility study at the end of
September in Shanghai is likely to offer a new
kind of investment tool for retirement.
China: Basic Rules for
Establishing Pension Management Companies in
China (September 11, 2007)
(Article in Chinese)
The most important characteristic for a pension
management company is to provide specialized
services to the corporation annuities, i.e., the
second pillar of the pension system regulated by
the government. Its clientele should include both
mid- and small companies as well as large
corporations. Both government and the private
sector should contribute to the establishment of
well-running pension management companies because
such companies are necessary to serve the needs of
the consumers and the market.
Japan: Social Security
Scandal Angers Japanese (September 2, 2007)
In the second major scandal to
hit the Japanese Social Insurance Agency in
recent years, the “government confessed to
losing track of pension records linked
to an astounding 64 million claims.” With 70
million members and $1.3 trillion in reserves, the
agency is one of the world's largest, but operates
with outdated filing systems, instead of
computerizing records. Scandals such as this erode
confidence in the ability of the government to
support its elders and prompted a growing number
of professionals to skip the mandatory system all
together.
Australia: Aussies Better Prepared For
Retirement (August 27, 2007)
Recent research by Putnam Investments Australia
and Portfolio Construction Forum found that
Australians are better prepared for retirement
than their U.S counterparts. It is common in the
U.S. for people who have retired to continue
working for financial reasons. The survey results
show that 35% of retired Americans continue
working while the ratio in Australia is only 25%.
In addition, the survey found that most retired
Australians continue working out of preference and
not of necessity.
Sri Lanka: Contributory Pension Scheme For
Migrant Workers (August 24, 2007)
The Sri Lanka Foreign Employment Bureau agreed
with the Social Security Board to create a pension
scheme for the migrant workers who have been
contributing to the country’s economic progress.
The plan should provide monthly pension payments
to the beneficiaries from age 60, and in case of
the migrant’s death, pay his or her spouse and
dependents. “The migrant workers undergo untold
hardships thousands of miles away for the survival
of their families back in Sri Lanka and make their
children's lives happy,” said the Minister.
Therefore, it is crucial to enroll these people in
a plan that will guarantee welfare for the working
migrant community.
China: Shanghai May Pilot A
Tax-Deferred Individual Retirement Plan (August
21, 2007)
(Article in Chinese)
Shanghai Insurance Regulatory Bureau is conducting a
feasibility research project on a tax-deferred
individual retirement plan, completion expected in
September, and put into a pilot program in Shanghai.
The retirement plan is modeled after the 401(k) plan
in the U.S. However, the proposed retirement plan
faces two main difficulties: getting approval from
the tax department, because tax deferral means a
reduction in tax revenues in the short term, and
getting support from the private companies because
under the plan they need to invest in employees’
individual retirement accounts, which increases
their costs.
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
Sweden: How They Have Fared
in the Roller Coaster Ride through the Past Decade
and a Half of Deep Recession and Economic Exuberance
(December 2007)
The study investigates how the economic well-being of
older people in Sweden
changed since the country’s deep recession in the
1990s. How
did the economically unstable period affect the income
of elderly citizens compared to the total population?
How did income inequality among older persons develop? The report
also includes data on the trends in older people’s
income starting in 1975.
United Kingdom:
2007 Review and Pension Trends Survey Report
(December 2007)
The Association of Consulting Actuaries’ survey
suggests that employers have little confidence in
the UK Government’s pension reforms, believing
they will level down pension contributions per
employee. This
survey report presents profound data information
on pension trends in the UK
in 2007.
European Union:
Pension Systems, Ageing and the Stability and Growth
Pact (November 2007)
This paper explores how the Stability
and Growth Pact (part of the EU treaty which regulates
against running deficits and issuing debt) will cope
with the future costs of population ageing in the
European Union. Obviously, population ageing has
forced countries to reform their pension systems and
will continue to do so, both by reducing the
generosity of pension arrangements and by switching to
funding rather than relying on pure pay-as-you go
pension provision. These reforms will affect adherence
to the Pact; in addition, the Pact may induce or
hamper incentives for reform. A simple model is
calibrated for addressing intergenerational equity.
France:
Eligibility Requirement for Retirement Programs in
France (November 2007)
This graphic depicts the current pension system in
France: for general regime (in both public and private
sectors) and for ‘special regimes’ (reserved for
several national companies such as railway or gas
companies). In November the government wanted to
reform this system, but many strikes dissuaded it from
promulgating a general pension law. Now negotiations
will happen one company at the time. The French
government still has the goal to remove the ‘special
regimes’ and unions say they are open to discussion.
Report: United Kingdom/US:
The Effect of Retirement Incentives on Retirement
Behavior: Evidence from the Self-Employed in the
United States and England (September 2007)
This report examines “how public and private pension
and health insurance systems affect the retirement
transitions of self-employed older workers compared to
wage and salary workers” in the US and England. This
study documents that wage and salary workers leave the
labor force earlier than do self-employed workers.
Why? Because they have some retirement income due to
“defined benefit pension incentives” contained in
public and private pension systems.
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.
United Kingdom: 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.
United Kingdom: 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.
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.
Russia:
Food Rich in Protein Strengthens the Muscles of the
Elderly (July 15, 2007)
(Article in Russian)
Foods rich in protein stimulate muscle growth in older
people. Diet containing a moderate amount of protein
may slow down the age – related reduction of mass of
muscles. According to a recent research, the quality
of life of the elderly largely depends on the strength
of the muscles. As a consequence of the muscle
weakening, the majority of the elderly do not fully
recover after severe traumas. The statistics show that
the seniors usually eat less protein than is
recommended by nutritionists. The latter occurs for a
variety of reasons, one of which is the high cost of
protein rich products.
Eastern Europe/Former
Soviet Republics: 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.
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.
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.
France: Three Plans of Action
(January 2007)
This graphic depicts the different ways to reach
financial balance in the pension system in France by
2020. There are three different policy choices: lower
the pension rate (abscissa), raise taxes (ordinate) or
raise the retirement age (oblique lines). The
different points on the graphic form a balanced
situation. For example, the X point depicts a balanced
point. Here the pension situation would be balanced
and sustainable.
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.
Germany: Silver
Workers: An Empirical Study of Post–retirement
Activities, Economic and Voluntary Work of Retired
Staff (2007)
In this study, the Geneva Association examines
active retired Germans aged 60 to 85. The authors
explain the reasons, motivation, and ideal conditions
for working in old age. The report finds various
reasons for retirees to engage in post-retirement
work, such as financial need, social contacts and
continued personal development. The implications for
greater engagement require rethinking social security
systems as well as ways to integrate older employees
into companies and assure their human rights.
Articles
France: "Making ends meet” with
small pensions (December 19, 2007)
(Article in French)
Some retired persons in France try to survive on 500
euros per month. This article includes the testimonies
of five elderly people. Many live alone and find it
difficult to make ends meet. Healthy, they sometimes
try to find a job to pay the bills. This is a
disturbing reality that the government must take into
consideration as the debate around pensions becomes
increasingly hectic.
Belarus:
Social Benefits Cancelled (December 18, 2007)
(Article in
Russian)
Belarus has cancelled some important social programs
for pensioners including discount medicine purchases,
dental care and public transportation benefits. Only
those citizens with an income lower than $86 per month
(a monthly living wage in Belarus) will continue to
receive the benefits.
Bulgaria:
Finally, the Age of Retirement Is Not Going Up
(December 15, 2007)
The Bulgarian government is looking for ways to reduce
the deficit in the pension system. In 2000 when the
new pension system emerged, the government banned
older persons from working in the paid laborforce.
However, many older workers wanted to stay on after
retirement age in order to have a larger pension. But
many Bulgarians don’t believe it’s fair to receive
both a pension and to contribute to the fund with the
promise of getting a higher pension. However, the
workforce population is becoming smaller and older
workers may be needed to fill jobs. At present, Emilia
Maslarova, Minister of Labour and Social Policy, says
that older persons may work longer to earn more money
and she affirmed that the retirement age was not going
to be raised in the near future.
France:
Strike Plans Fizzle in France (December 12, 2007)
Strikes focusing on pensions have almost ended in
France after ten days of demonstrations in the
capital. Unions canceled their strike appeal on
Wednesday and Thursday. The government accepted the
proposal to negotiate with one company at a time and
unions said they were ready to negotiate. Many critics
worry about an end to adequate income protection for
French retirees and further erosion of labor
protection throughout the economy.
Greece : Greek
Unions Call 24 hr Nationwide Strike Over State
Pension Reforms (December 11, 2007)
Greek unions are holding a 24-hour national
strike to protest the government’s pension
reforms. Workers fear that the government will
raise the retirement age and cut pension benefits.
Both civil and private sector employees will
participate in the strike. Transportation networks
will not operate during the strike.
Russia: Russia
Spends Stabilization Fund on Pensions (December
11, 2007)
(Article in Russian)
Vladimir Putin says that Russia will start
spending its Stabilization Fund capital on pensions
and innovation projects next year. The balance in the
reserve fund has reached its optimal level, allowing
it to cover the Pension Fund's deficit and improve the
welfare of the people. At the present moment, the
Stabilization Fund capital equals $144.43 billion
dollars. Analysts report, however, that Putin's
announcement of the investment might negatively
influence the oil share market.
United Kingdom: New Pension
Plan for all Workers (December 5, 2007)
The British Government is organizing plans so that
everyone can enroll in a pension plan. This new bill
which will receive its first reading in Parliament
contains several major changes: workers would be
automatically enrolled in the company pension scheme.
Employers would also have to match 3% of their staff’s
pay and put it into a pension. Moreover, the bill
would introduce personal accounts for low and middle
income persons.
Russia:
Base Labor Pension Increase in Far East (November
29, 2007)
(Article in
Russian)
The Russian government increased the base labor
pension allowance in Primorye, in the Far East region
of Russia, starting December, 1, 2007. The government
increased the base pension level by 300 RUB and by 600
RUB for the older persons over 80 years. According to
the report of the Russian Pension Fund, invalids, the
Great Patriotic War soldiers, and the aged who were
involved in the Leningrad blockade will also receive
an increase in their disability pension ranging from
150 RUB up to 900 RUB.
Greece: Greek Journalists
Strike Over Pensions (November 27, 2007)
Greek journalists went on strike November 27 to
protest proposed new pension reforms. Unions fear the
government could cut pension benefits in the future
and increase the age for retirement. A third round of
negotiations on pension reform is due to begin
November 28.
France:
Social Conflicts : Unions and Government Stay
Firm (November 13, 2007)
Strikes against the ‘social regimes’ reform in France
have been extended. Seven railway workers trade unions
instituted a new strike against SNCF, the first
railway company in the country, beginning November 13,
2007. Some workers from the RATP (Parisian subway
company), and EDF GDF (gas company) are also on
strike. The general secretary of CGT, Bernard
Thibault, reaffirmed that the problem was caused by
the proposed special pension changes. According to
Thibault, previous negotiations with the companies are
now worthless.
France: French Government to
Discuss Pension Reform with Unions, State Companies
this Week (October 21, 2007)
Strikes were called in France on Thursday and Friday
last week to fight against proposed pension system
reforms. The government wants to end by 2012 an
arrangement that allows all workers, even in certain
state sectors, to draw a full pension after 37.5 years
of contributions, bringing them into line with the 40
years required elsewhere. Labor minister Xavier
Bertrand will meet with unions and some state-owned
corporations this week to discuss the reform. However,
for him, 'the target of moving 37.5 years of
retirement contributions to 40 is not negotiable.'
France:
Dependency: a report for a single benefit for
elderly people and disabled persons (October 17,
2007)
(Article
in French)
The French
National Fund for solidarity and autonomy proposed,
on October 17, 2007, to set up
a single pension for older and disabled persons.
This text synthesizes the French State
's interests as well as organizations that defend
the rights of older and disabled persons.
Nevertheless, the report doesn’t specify how this
measure will be financed, whether by the public or
private sectors. Head of State Nicolas Sarkozy has
already announced himself in favor of adding
individual private accounts for income in old
age.
France: French Government is
Expecting a Difficult Social Week (October 15, 2007)
(Article in
French)
Demonstrators will be out in force against the
Fillon’s administration and its proposal to change the
“special regime” pensions beginning Thursday, October
18, 2007. Trade Unions are asking for protection of
the ‘special regimes’ pensions and the protection of
the general pension system. Some unions argue that
these two focus on the same general issue. Others say
that they are two distinct claims because each
concerns a different category of the French
population.
France: Special Pension Regimes
: Xavier Bertrand Wants Workers to Contribute for 40
Years (October 10, 2007)
(Article in
French)
On October 10, 2007, French Trade Unions learned about
the Sarkozy government’s changes in their “special
regime” pension system. Between now and 2012, the
500,000 workers who benefit from “special regimes”
will have to contribute toward their pensions for 40
years instead of 37 and a half years that was in force
until today. The French Government announced that this
measure wasn’t negotiable, and introduced a financial
penalty in case of early retirement as well as a
financial reward to those who take a late
retirement.
Europe: EU Executive Backs Down
on Pension Mobility Plan (October 10, 2007)
On October 10, 2007, the European Commission adopted a
measure to make it easier for workers to take their
private pensions to a new employer. This measure is a
new step toward making the labor market more flexible
so that workers won’t be stopped by administrative
barriers. The EU wants to boost competitiveness by
encouraging people to move between jobs. The EU
Assembly must now approve it at a final reading. Will
this policy make old age more or less comfortable for
those now in the European workforce?
Italy: Referendum On
Pension (October 8, 2007)
(Article in
French)
From Monday,
September 8th to Wednesday, September 10th,
2007, thousands of Italians will vote for or against
the pension agreement, concluded between the trade
unions and the Romano Prodi administration. This vote
will show the level of popular support for this
measure but has no juridical standing. Some 15 million
workers, unemployed persons and retirees are concerned
about the outcome.
Ireland: Our Pension System
is a Failure, New Study Claims (September 28, 2007)
The new book, “Choosing Your Future: How to Reform
Ireland’s Pension System,” attacks the system of
private pensions in Ireland. This book was published
by TASC, a think tank which works for equality and
social justice. Ireland has the highest rates of
pensioner poverty in the European Union. According to
the authors, the private pension system is costly and
too risky for vulnerable people. Middle and low
earners can’t afford them.
France: Pension Reform Awakes
Trade Union’s Anger (September 26, 2007)
(Article in
French)
By suggesting
changing the ‘long career measure,’ on
September 25, 2007, François
Fillon challenged the French trade unions.
The measure would end the policy of permitting workers
who began to work at ages 14, 15 or 16 to retire
earlier. Fillon wants to change this law because of
its financial cost (2,2 billions euros in 2007). François
Chérèque,
general secretary of the French main trade union
CFDT, is opposed to this change.
France: Social Security: First
Action Before the Financial Restructuring (September
25, 2007)
French social security will face a 12.7 billion euro
deficit in December 2007. Nicolas Sarkozy and his
government plan to balance social security account by
2012. The plan’s main change focuses on cuts to health
insurance (1.7 billion of savings). Savings on pension
are also planned: the government wants to discourage
early retirement. Concerning older people, the
government wants to encourage creation of more nursing
home, including nursing care.
France: Why
is the Reform of Social Pensions So Important?
(September 2007)
(Graphic in French)
There are several kinds of ‘special’ pensions in
France that have come under fire in the new
government. This
study focuses on five of them. In the gas and
electricity industries, in 2003, there was 1,14 times
more contributors than pensioners. But in
2020, according to this graphic, there will be more
pensioners than contributors. Contributors will be
0,81 times less than pensioners in this field. In some
sectors like mines; in 2020, there will be only 3000
contributors for 199,000 pensioners. Some claim
that this situation is unsustainable. But are they
looking at other possibilities for keeping the State’s
funding promises, such as slightly higher social taxes
or other forms of payments? How does a country review
fairly all pensions, private and public?
Czech Republic: Czech Old Age
Pensions to Slightly Increase (September 24, 2007)
Will increases in pensions keep up with other costs to
Czech elders? Old age pensions in the Czech Republic
will increase by 346 crowns (roughly $17.70) monthly
on average as of next year. The Minister of Labor and
Social Affairs, Petr Necas, claims that this increase
is sufficient to support the needs of the elderly.
“However, the opposition and trade unions say the
planned increase is too low as it will not even
compensate the impacts of the government public
finance reform, including raised VAT tax on food,
medicines and public transport.”
France: Work in Old Age, No
Thank You! (September 17, 2007)
(Article in French)
French trade unions are already preparing for a strike
to fight against changes in the ‘special regimes.’ In
this article, some railway workers reveal that they
chose this occupation because of the pension benefits.
If they had known they would have had to work longer,
they wouldn’t have taken this job thirty years
ago.
France: Clash Expected Over French
Pensions (September 13, 2007)
In early September French President Nicolas Sarkozy
prepared to change the ‘special regimes’ pensions
granted to workers in certain state-owned companies,
such as railway operator SNCF and utilities EDF and
Gaz de France. Next Tuesday, he will have to explain
the change in the French retirement policy to the
trade unions, and first of all to the CFDT, which is
already preparing for a strike. This issue
re-launches the debate about how to manage the
French pensions as an increasing number of persons
retire.
Lithuania: Elderly Go on
Hunger Strike Over Pensions (September 12, 2007)
Over the last couple of years, the Lithuanian
government overhauled the state pension system
because of financial strains. Many workers that are
now retired lost their pension benefits as the
changes posed strict limits on pension and
disability benefits for workers employed after 2001.
A group, the Lithuanian Pensioners’ Movement, has
held a hunger strike urging Parliament to approve
new legislation giving them access to years worth of
unpaid worker’s pensions.
UK: Pension Payouts Could
Depend on Postcode (August 30, 2007)
A UK insurer plans to use postcodes to calculate
pension payouts when setting annuity rates. Currently
the main criteria are age and sex to determine payout
levels. Since postcodes are already used to price
other financial products, insurers want to incorporate
this information into life expectancy. Researchers
found that the place of residence also influences
someone’s life expectancy. Using postcodes would
insure that annuitants living in a safe, comfortable
and healthy neighborhood would presumably live longer
and therefore receive smaller annuity payouts over a
longer period of time.
Armenia: Government Approves
Pension Hike (August 30, 2007)
During the period leading up to presidential
elections, it is common for the government of Armenia
to announce positive reforms to be implemented in the
country. As such, the Armenian government set a 60%
increase to small pensions paid to elderly citizens.
Starting January 1, retirees in Armenia will receive
20,000 drams ($60) monthly. It is important to note
that increases were very modest for a long time in
Armenia. The government has also announced plans to
raise the average pension gradually to at least 36,000
drams by 2012.
Russia: The Government
endorsed Bill to Increase Pensions for the
Northern Territories (August 29, 2007)
(Article in Russian)
The
Russian government endorsed a bill to increase the
size of basic pensions for the northern territories.
"With the following law we want to increase the
amount of old age pensions and disability benefits
for individuals who have worked at least for 15
years in the northern part of the country or 20
years in its surrounding territories,” said State
deputy Ryazan. The size of the basic old-age
pensions and disability benefits for people who have
dependent family members will be increased depending
on the number of family members (one to three).
Bulgaria:
Average Pensions In Bulgaria Will Exceed 90 Euro As
Of October (August 29, 2007)
Starting from October 1, 2007, Bulgaria's National
Social Security Institute (NSSI) will raise the
minimal pension. Meanwhile, the new pension reform
will include a reduction of social security
installments from 23% to 22% for people born before
1960 and from 18% to 17% for people born before 1959.
The average pension will equal to 183.34 leva, or
about 90 euro.
France: Francois Fillon is
Defending Nicolas Sarkozy’s Program (August 21,
2007)
(Article in French)
French Prime Minister Francois Fillon, who appears
unobtrusive behind President Sarkozy, is giving an
update on the coming reforms in France. While those
changes are not unanimously supported in the European
Union or in the US, Fillon stresses that despite the
current financial crisis, the health system and the
pension programs will be changed beginning in
September. According to him, France needs such
structural changes to boost economic growth and to
balance the budget.
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.
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.
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
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.
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Middle East & North Africa
Bahrain:
No Early Retirement of Women Workers (November 12,
2007)
“Bahrain government has once again rejected a demand
of parliamentarians to implement early retirement of
female workers because of high cost of the proposal.”
According to the proposal, women who want to take
early retirement would be treated on a par with those
retiring for sickness or superannuation. Given the
gender inequalities in salaries and retirement costs,
is this proposal an effective measure to bridge the
gaps?
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.
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Global
Report:
World: Global Pension Plan (October 2007)
(Report is also available in Spanish)
Demographers expect 9 billion human beings in 2050
and more than 2 billion older persons over 60. If
nothing changes, 1.20 billion will live under the
poverty line by that time. Robin Blackburn, a
contemporary English economist, advocates for a
‘global pension’ that would be financed by a small
tax on global financial transactions and available
to old persons globally. It would enable people over
60 to get, at the beginning, a
one-dollar-a-day-pension. According to the author,
"this small sum would help to lift hundreds of
millions of the aged out of poverty in every part of
the globe."
World:
Pensions in Developing Countries: A Quest for a
Modern Format for Intergenerational Solidarity
(October 2007)
Today, 100 million people over 60 live on less than
$1 a day. However, older people take on a key
responsibility, especially in developing countries:
they often take care of grandchildren while parents
move to the cities or suffer from HIV/AIDS. Helping
old people would therefore have positive
consequences for the younger generation. To fight
against extreme poverty among old people, this
report argues for setting up social pensions, a
non-contributory pension.
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.
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