Pension

Pe drumul modernizării societății românești, al cărei ritm a crescut în prima jumătate a secolului al XIX-lea, sunt oameni și fapte despre care încă se mai poate vorbi, chiar dacă oamenii nu au fost dintre corifeii mișcărilor revoluționare de la 1821 sau 1848 și chiar dacă faptele lor nu au contribuit decisiv la schimbările din Moldova și din Țara Românească. Prin acest articol, am reconstituit biografia unui boier moldovean, Iancu Istrati, pe temeiul arhivei sale păstrate la Arhivele Naționale din București și a altor documente ale vremii. Dintre faptele boierului de la Călimănești (ținutul Tutova), care demonstrează practic cum s-a modernizat societatea românească în cele două decenii ce au urmat reinstaurării domniilor pământene la 1821 în Țările Române, am ales: biblioteca, cu cercetarea inventarului și cu descoperirea unora dintre cititorii ei; educația copiilor, cu încercarea de a trimite un băiat la Academia Militară din Sankt-Petersburg și cu prezentarea unor frânturi din învățătura la pension a acestora; administrarea averii, cu măsurile moderne luate pentru sporirea ei și cu înfățișarea succintă a inventarului unei case boierești; legăturile cu membrii importanți ai familiei: cu frații, Nicolae Istrati, scriitor și om politic, și Meletie Istrati, egumen al mănăstirii Slatina și episcop de Huși, și cu cumnatul, Vasile Adamachi, negustor, boier și mare binefăcător al Academiei Române.

The reform of the liberal professions-initiated measures, controversies and restrictions Maria Alexandru / 27 The interest rate-factor that determines investment in saving instruments Magdalena Călin / 32 Fiscal policy and real convergence. The case of central and eastern european countries Delia Ţâţu, Lucian Ţâţu / 36 Analyzing the public debt sustainability in EMU Emilia Mioara Câmpeanu / 43 Correlations between fiscal policy and macroeconomic indicators in Romania Iulian Braşoveanu, Laura Obreja Braşoveanu, Cristian Păun / 51 Analyzing causality between Romania's public budget expenditures and revenues Andreea Stoian / 60 Tax evasion: an analysis of the collocation "pay with money, not with years" Delia Cataramă / 65 Regional development program. Present state of ISPA program and perspectives for Romania Daniela Călinescu / 72 Romanian Budgetary Cosolidation between European and local Attila György, Adina-Cristina György / 79 Some aspects regarding the administrative absorption capacity for the structural funds in the czech republic, Estonia, Hungary, Slovakia, Slovenia and Romania before accession Oana Lahman / 85 Financial and monetary policies in European Union 4 4 Recovery ratings in the event of sovereign default issuers. an investigation on the factors which influence their calculation by Standard & Poor's Emilian Miricescu / 93 Public investments, determinants of economic development Andreea Semenescu / 100 Structural funds-an instrument of economic growth within the policies of cohesion and regional convergence Meral Kagitci / 107 United Europe and its problems Dan Ivănescu / 111 The governmental policies that encourage the positive contributions of the foreign direct investments inflows Mihail Vincenţiu Ivan, Viorela Iacovoiu / 115 Analysis regarding the Israeli pension funds system Mariana Popa, Paul Tănăsescu / 124 Risk transfer through insurance contract-part of business risk management Doina Popescu / 134 Protection against natural catastrophes in Romania Marius Gavriletea, Krisztina Kiraly / 138 The mandatory private pensions. A european challenge for Romania Cosmin Şerbănescu / 145 The development of the financial risks reinsurance activity from the single european market perspective Mihaela Cojocaru / 150 Econometrical models for estimating the life insurance demand Simona Dragoş, Cristian Dragoş / 157 A model for generating efficient investment portfolios for the insurance companies on the Romanian market Filip Iorgulescu / 166 The portofolio administering at the isurance companies by A.P.T. multifactorial model Mitică Pepi / 173 Asymmetry in the stochastic volatility models Bogdan Negrea, Elena Bojesteanu / 180 Episodic dependencies and the profitability of moving average strategy on Romanian capital market Alexandru Todea / 186 Value-at-risk. Measurement and evaluation methods for market risk Alina Grigore / 194 Contents 5 5 Stochastic volatility models and stylized facts Ionuţ Alin Sima / 203 The impact of financial statements announcements on stock prices at BSE Adrian Zoicaş-Ienciu / 211 Multiples and their use for equity valuation on european capital markets Dragoş Ioan Mînjină / 220 Quantitative analysis of banks' management performance Nicolae Dardac, Iustina Alina Boitan / 229 The impact of mergers and acquisitions on the economic performances Teodora Barbu, Bogdan Dumitrescu / 236 Banking crises and their implications on the financial system Carmen Obreja, Dan Ştefan Armeanu / 244 Monetary policy transmission mechanism in romania-a VAR approach Marius Alin Andrieş / 250 Price and wage inflation Alina Lucia Trifan / 261 NBR monetary policy interest rate: determinants and optimum level Gabriel Bistriceanu / 268 The relationship between the exchange rate and the inflation: empirical survey for Romania Cătălina Adriana Hândoreanu / 276 Interest rate risk quantification models Ana-Cornelia Puiu, Alina Nicoleta Radu / 285 The influence of R&D policy on performance of the companies listed with bucharest stock exchange (through intangible assets) Iuliana-Ioana Purcărea, Ion Stancu / 293 Corporate competitiveness in the context of consolidating the common tax base regarding profit taxation in the European Union Georgeta Vintilă, Oana Filipescu / 299 Capital effectiveness valuation destined to investments in conditions of uncertainty Dalina Dumitrescu / 308 The impact of the country rating on the corporate rating: empirical perspective in the context of financial globalization Cristina Maria Triandafil, Petre Brezeanu / 316 Micro and macroeconomic determinants of oil stock prices on Romanian capital market

The study examined the effect of Contributory Pension Scheme on Nigerian Capital
Market.  The  specific  objectives  were  to  analyze  the  effect  of  Total  Pension  Assets  under Management  on  Total  Market  Capitalization  and  on  Total  Value  of  Deals  of  the  Nigerian Capital  Market.  The  study  was  based  on  Ex-post  facto  research  design.  Ordinary  Least Square Regression was used as analytical technique. It was found that Pension Assets under Management  of  the  Nigerian  Pension  industry  has  positive  and  significant  effect  on  Total Market  Capitalisation  of  the  Nigerian  Capital  Market.  Also,  Pension  Assets  under Management of the Nigerian Pension industry has no positive and significant effect  on Total Value of Deals per year of the Nigerian Capital Market. The positive coefficients indicate that
Total  Pension  Assets  under  Management  can  facilitate  increase  in  Total  Market
Capitalisation and Total Value of Deals per year of the Nigerian Capital  Market. Therefore, the  study  concludes  that  an  increase  in  Total  Pension  Assets  under  Management  would boost upwards the Total Market Capitalisation and Total Value of Deals per year by making more fund available for trading in the Nigerian Capital Market. It is recommended that Total Pension Assets under Management transactions in the Nigerian Capital Market should have a wide mix of investments portfolio so as to avoid liquidity risk challenges.

With less income or little income, old age has become a great deal to worry in bigger cities of India. Even though, government supports the senior citizens with old age pensions, it only helps to cover basic living expenses. Instead of increasing the load on government, let these senior citizens relocate to villages and let government build old age homes in these villages with civic amenities. This will not only improve the living standards of senior citizens of india but also enable them to lend soft loans.

The paper aims to examine an aspect which has not yet been sufficiently addressed in previous studies (Bagavos and Tragaki 2008). It deals with the potential volume of employed population, seen from the supply point of view, in selected EU Member States. The starting point lays on the observation that in certain countries, participation rates for specific age groups are lagging behind maximum observed levels. The basic research question is to quantify to which extent upward trends in participation rates (especially among women and specific age-groups) and migratory inflows could in short or medium term, off-set the bearing of demographic ageing on labour and employment prospects. The main objective of this work is to examine the significance of such an increase in employment rates on pensions sustainability. In particular, the gradual increase of employment rates for various population sub-groups as well as migration from third countries can contibute to sustain employment despite the adverse demographic trends (Bagavos 2003; European Commission 2010).

This paper documents the reversal of pension privatization and the reforms that took place in the 1990s and 2000s in Poland. The report analyses the political economy of different reform proposals, and the characteristics of the new pension system, including laws enacted, coverage, benefit adequacy, financing and contribution rates, governance and social security administration, social dialogue, positive impacts and other key issues of Poland’s pension system.

The increasing difficulties in financing the welfare state and in particular public retirement pensions have been one of the outcomes both of the decrease of fertility and birth rates combined with the increase of life expectancy. The dynamics of retirement pensions are usually studied in Economics using overlapping generation models. These models are based on simplifying assumptions like the use of a representative agent to ease the problem of tractability. Alternatively, we propose to use agent-based modelling (ABM), relaxing the need for those assumptions and enabling the use of interacting and heterogeneous agents assigning special importance to the study of inter-generational relations. We treat pension dynamics both in economics and political perspectives. The model we build, following the ODD protocol, will try to understand the dynamics of choice of public versus private retirement pensions resulting from the conflicting preferences of different agents but also from the coop...

In this work, we made a presentation regarding to the Israeli pension system which was deeply reformed by passing it from a system based on Defined Benefits with huge actuarial deficits to a system based on Defined Contribution actuarial balanced. One of the major by products of this reform is the concentration of the pension market in the hands of

Empirical analyses of annuities markets have been limited to a few developed countries and restricted by data limitations. Chile provides excellent conditions for research on annuities due to the depth of its market and the availability of data. The paper utilizes an extensive dataset on individual annuities to examine econometrically a measure of market performance -money's worth ratios (MWRs), or the ratio of the expected present value of annuity payments to the premium. The results show that annuitants in Chile have generally got a good deal for their premiums, as indicated by MWRs higher than one and also higher than those estimated for other countries. The difference between Chile and other countries is striking considering that annuities in Chile are indexed to prices. The wide range of indexed instruments in Chile, allowing providers to hedge their risks while extracting higher returns, helps explain the difference. The high degree of market competition has also contributed to this outcome. Efforts to improve market transparency through a new electronic quotation system have decreased the dispersion of MWRs. Finally, MWRs tend to decrease for contracts with longer durations, reflecting pricing for higher longevity and reinvestment risks. These results are consistent with separate research on the annuity rate, and indicate the need to ensure competition and market transparency, as well as to develop appropriate financial instruments for providers in order to ensure good outcomes for annuitants.

This letter analyzes the impact of economic integration on capital accumulation and capital flows when countries differ in their social security systems. Funding and early retirement both foster capital accumulation relative to payas-you-go pensions with flexible retirement. When economies integrate, both imply capital outflow possibly resulting in utility losses.

Over the last 100 years, there has been a steady decline in mortality rates. With the unexpected decrease in death rates; variability in the age of death declined and deaths are concentrated to the older years of life, therefore, causing deficits in the pooled funds of insurance and pension providers, which are built upon the underestimated rates. To correctly measure the effect of mortality rates on the financial stability of these providers, longevity risk should be taken seriously. This study aims to investigate the future mortality and longevity risk of three countries with different age structures. Turkey, Germany, and Japan are chosen with respect to their expected life and population distributions. Lee-Carter mortality model is used on the historical census data to forecast future mortality rates. The longevity risk on a hypothetical portfolio is assessed based on static and dynamic mortality table approaches. To determine the impact of longevity risk retrieved from the use o...

Empirical analyses of annuities markets have been limited to a few developed countries and restricted by data limitations. Chile provides excellent conditions for research on annuities due to the depth of its market and the availability of data. The paper utilizes an extensive dataset on individual annuities to examine econometrically a measure of market performance-money's worth ratios (MWRs), or the ratio of the expected present value of annuity payments to the premium. The results show that annuitants in Chile have generally got a good deal for their premiums, as indicated by MWRs higher than one and also higher than those estimated for other countries. The difference between Chile and other countries is striking considering that annuities in Chile are indexed to prices. The wide range of indexed instruments in Chile, allowing providers to hedge their risks while extracting higher returns, helps explain the difference. The high degree of market competition has also contributed to this outcome. Efforts to improve market transparency through a new electronic quotation system have decreased the dispersion of MWRs. Finally, MWRs tend to decrease for contracts with longer durations, reflecting pricing for higher longevity and reinvestment risks. These results are consistent with separate research on the annuity rate, and indicate the need to ensure competition and market transparency, as well as to develop appropriate financial instruments for providers in order to ensure good outcomes for annuitants.

In 1981 Chile adopted its new multi-pillar system, which featured privately managed individual accounts. Starting in 1983 payouts from the accounts were permitted and detailed rules about payouts were put in place. The Chilean scheme therefore gives us an opportunity to examine how pensioners and pension providers react when individual accounts replace DB systems, and how detailed regulations shape these reactions. Retirees in Chile have a choice between early versus normal retirement (before or after age 65M/60W) and between annuitization versus programmed withdrawals; lump sum withdrawals are largely ruled out. Almost two-thirds of all retirees have annuitized-a very high proportion compared with other countries. This paper argues that this high rate of annuitization is the result of guarantees and regulations that constrain payout choices, insure retirees through the minimum pension guarantee, eliminate other DB components, and give a competitive advantage to insurance companies selling annuities. The minimum pension financed by the government provides insurance to workers with small accumulations, who retire at the normal age with programmed withdrawals, while those with large accumulations retire early and must purchase annuities to acquire longevity and investment insurance. Insurance companies further induce annuitization by marketing aggressively, facilitating early retirement for those who annuitize and offering a high money's worth ratio for price-indexed annuities. We find evidence of adverse selection based on asymmetric information about short run health status, but this does not seem to deter the high rate of annuitization.

Many south-east European states made the transition from socialist to market economies. All described here had to reform their pension systems to match the new context in which these operated. The experiences of 10 countries are reviewed – seven of which were once part of Yugoslavia. Some countries’ reforms were more radical than others. Five of them merely adapted the Bismarckian systems they had inherited; four others adopted the “three pillar” model that the World Bank had been propagating. One went further than that. The four who followed World Bank model were often forced to backtrack. Whatever the longer-term benefits, they generated their own shorter-term fiscal problems. Nonetheless, the most radical reformer gives some indications of possible ways forward. The south-eastern European states do not have financial markets that can support capitalised/funded pension systems. Nor do they have the resources to pay proportional pensions that, at the same time, keep retired people ...

In 1981 Chile adopted its new multi-pillar system, which featured privately managed individual accounts. Starting in 1983 payouts from the accounts were permitted and detailed rules about payouts were put in place. The Chilean scheme therefore gives us an opportunity to examine how pensioners and pension providers react when individual accounts replace DB systems, and how detailed regulations shape these reactions. Retirees in Chile have a choice between early versus normal retirement (before or after age 65M/60W) and between annuitization versus programmed withdrawals; lump sum withdrawals are largely ruled out. Almost two-thirds of all retirees have annuitized-a very high proportion compared with other countries. This paper argues that this high rate of annuitization is the result of guarantees and regulations that constrain payout choices, insure retirees through the minimum pension guarantee, eliminate other DB components, and give a competitive advantage to insurance companies selling annuities. The minimum pension financed by the government provides insurance to workers with small accumulations, who retire at the normal age with programmed withdrawals, while those with large accumulations retire early and must purchase annuities to acquire longevity and investment insurance. Insurance companies further induce annuitization by marketing aggressively, facilitating early retirement for those who annuitize and offering a high money's worth ratio for price-indexed annuities. We find evidence of adverse selection based on asymmetric information about short run health status, but this does not seem to deter the high rate of annuitization.

This paper belongs to series of 19 country and regional case studies commissioned as background research for the World Bank's Independent Evaluation Group (IEG) report "Pension Reform and the Development of Pension Systems." The findings are based on consultant missions to the country or region, interviews with government, Bank, donor, and private sector representatives involved in the pension reform, and analysis of relevant Bank and external documents.

A factor and goal-driven framework for assessing asset allocation and contribution decisions within defined-benefit pension plans is developed in this article. A critical element is setting future benefits with reference to the ability of the pension sponsors to support liabilities under reasonable investment expectations. The approach suggested by the authors combines a micro study of a representative cohort of individuals with an aggregation across a target population to estimate consistency between the micro and macro environments. A stochastic inflation risk factor affects both contribution and spending cash flows. This agent-based model suggested by the authors provides a more realistic framework than traditional approaches for setting pension benefits.

The question of when committed employees retire is important to consider under a defined-benefit pension plan, which credits employees with benefits of lower overall value for retiring either too early or too late. We find employees with higher levels of affective commitment more likely to plan to retire later and past the age when it is most financially attractive for them to leave the organization. In contrast, employees with moderate to high levels of continuance commitment plan to retire earlier and at ages when it is most attractive for them to do so. Implications for HR policy and practice are discussed.

Due to the several factors, the applicability of crisp techniques to the pension debt valuation and fund management is questionable. We take a fuzzy approach and use triangular fuzzy numbers (T.F.N.s) to capture the above imprecision. We suggest that the best pension fund strategy is that of a fuzzy contingent immunization. This will involve an active management of pension plan's assets until the value for the pension threshold is reached, at which time the pension fund manager should switch to a fuzzy immunization strategy. We apply this strategy to the Canadian firm-level data and report results.

In this paper, I analyze consumption, aggregate savings,output and welfare implications of …ve di¤erent social security arragements whenever there is demographic uncertanity. Following Bohn(2002), I analyze the e¤ect of an uncetain population growth in an extended version of a modi…ed Life-cycle model developed by Gertler(1999). Population growth dampens savings and output under all arrangements. Pay-as-you-go-De…ned Bene…t system appears to fare better than all other alternatives, falling short of the private annuity market with no pension system. But social security in general increases social welfare, with Fully Funded systems faring the best. Thus there appears to be a clear tradeo¤ bewteen growth and social welfare. The social security system also reduces the volatility of the economy.

The paper argues that wage dispersion between white-collar and blue-collar workers has caused the rise and expansion of pension funds in a direct and long-run structural manner in the USA. Using data from the Saez-Zucman and the St. Louis Fed’s FRED datasets, the argument is empirically analysed on yearly data for the period 1964-2012 in the USA. The results confirm the existence of a long-run relationship of causality from wage dispersion to the share of pension funds within US households’ financial wealth. Applying a vector error correction model to the data it emerges that the variance in pension funds due to wage dispersion starts to rise after the fifth period, and reaches 69% in the tenth period.  .

This document presents an analysis of pension coverage trends in Latin America for the past decades. Its preparation involved the collection, revision, and processing of household surveys in over 18 countries in the region, spanning a period of almost 40 years in some cases. The main goal of this document is to offer comparable data on pension coverage among the economically active population and the elderly, considering the relevance of several demographic, social, and economic variables on these coverage levels. By producing this large and comparable regional dataset, the document supports the discussion of several stylized facts on pension coverage in Latin America. The results show that coverage among active workers is low in most countries, although there has been a relative improvement since the early 1990s. The situation is still distressing among workers in the primary sector or employed by small enterprises as well as for women, primarily because of their persistent lower r...

In this paper, we apply two types of automatic balance mechanism (ABM) to the French first pillar pension system for private sector employees (CNAV). One is based on a tax gap ratio (TGR-ABM) and the other is the smooth ABM (S-ABM) developed by Gannon, Legros and Touze (2013). Two long-run forecast scenarios over the period 2014-2063 are analysed. The first is optimistic (“benchmark”) and assumes a 4.5% unemployment rate and a 1.5% productivity growth rate in the long run. The second is more pessimistic (“prudent”), with a 7.5% unemployment rate and a 1% productivity growth rate in the long run. For the benchmark (respectively prudent) scenario, a TGR-ABM requires, now and for the next 50 years, a 2.8% (respectively 6.3%) decrease in pensions and a 2.9% (respectively 6.7%) increase in the tax rate. An S-ABM requires, for the benchmark (respectively prudent) scenario, an immediate 1.5% (respectively 3.6%) decrease in pensions and a 1.4% (respectively 3.5%) increase in the tax rate. I...

The study assessed the technical efficiency of pension fund administrators in Nigeria using Stochastic Cost Frontier Model to generate efficiency scores for each of the eleven (11) selected pension fund administrators from a population of twenty-one (21). Panel data gathered from the annual reports of the selected pension fund administrators and the National Pension Commission were analysed using the maximum likelihood technique. The result showed that inefficiency, in varying degrees, existed in the selected fund administrators due to input costs on labour, equipment and premises and the mean and median efficiency scores were about 75% and 72% respectively. While the most efficient pension fund administrator recorded inefficiency score of 0.077, the least efficient pension fund administrator had inefficiency score of 0.388. The study concluded that increase in profitability, number of contributors, engaging in open fund investment activities and merger and acquisition reduce operating cost. It was therefore recommended that there should be a regulator-initiated merger and acquisition in the industry to eliminate waste, with positive impact on investment income. Besides, the regulatory agency should ease and expand transfer windows for existing contributors to transfer their pension contributions from an inefficient pension manager to efficient one to engender competition in the pension industry.

The European Union is currently confronted with major economic and demographic changes that are challenging its ability to maintain strong social cohesion. Some possible solutions can be considered, such as increasing the employment for older workers and for women. In a comparative analysis for ten European countries, Romania has the lowest life expectancy, of 72.2 years, and the largest difference between life expectancy and standard retirement age, of 9.7 years. The private administrated pension funds can be a solution for labour market crisis from Romania; so recently there were adopted and implemented the regulations for this field.

In recent years, investment portfolio selection is growing in importance for many emerging market pension funds, as pension reforms replace traditional pay-as-you-go systems with advanced funding systems. Various investment regulations are applied to the funded pensions, particularly in the form of portfolio limits for equities and international assets. With a bootstrap simulation approach, this paper attempts to quantify the impacts on retirement benefits of restricting international assets from the investment portfolios of emerging market pension funds. We find that, on average, over half of the pension portfolios of emerging market countries should be in international assets in order to maximize the expected utility of moderate and conservative pension fund participants. More generally, international assets can play a significant role in the investment portfolios for workers with risk aversion varying from aggressive to conservative. With few exceptions, the entire probability distribution of wealth accumulations at retirement could be shifted higher with the inclusion of international assets.

This paper contrasts and empirically tests two different views of corporate pension policy: the traditional view that pension funds are inaged without regard to either corporate financial policy or the interests of the corporation and its shareholders, and the corporate financial perspective represented by the recent theoretical work of Black (1980), Sharpe (1916), Tepper (1981), and Treynor (1971), which stresses the potential effects of a firm's financial condition on its pension funding and asset allocation decisions. We find several pieces of evidence supporting the corporate financial perspective. First, we find that there is a significant inverse relationship between firms' profitability and the discount rates they choose to report their pension liabilities. In view of this we adjust all reported pension liabilities to a common discount rate assumption. We then find a significant positive relationship between firm profitability and the degree of pension funding, as is consistent with the corporate financial perspective. We also find some evidence that firms facing higher risk and lower tax liabilities are less inclined to fully fund their pension plans. On the asset allocation question, we find that the distribution of plan assets invested in bonds is bi-modal, but that it does not tend to cluster around extreme portfolio configurations to the extent predicted by the corporate financial perspective. We also find that the percentage of plan assets invested in bonds in negatively related to both total size of plan and the proportion of unfunded liabilities. The latter relationship shows up particularly among the riskiest firms and is consistent with the corporate financial perspective on pension decisions.

1. Introduction Corporate organizations throughout the world acknowledge the importance of employee motivation and performance in the short and long-term success of an organization (Nemeckova, 2017). According to research carried out by Morgan et al. (2013), organizations are in constant search of best practices that lead to an increase in employee's motivation and eventually their performance. One of the most used strategies to improve performance among employees is the extrinsic reward system (Francis et al., 2020). Extrinsic rewards refer to tangible rewards given by organizations to their employees in recognition of their exemplary performance in their job roles. In most of the cases, extrinsic rewards usually come in the form of financial rewards and benefits. According to Noko and Nwuzor (2021), extrinsic rewards in an organization are characterized with being easily justifiable, embeddedness in organizational routines and processes and also measurable. Scholars have identified the following forms of extrinsic reward: pay rises issued to employees due to their excellent performance in their job role (

One of the major economic reforms in the Chilean economy was the 1981 pension reform. In that year, Chile transformed its Pay-as-you-go social (PAYG) security system to an individual account social security system (IA). This paper discusses the impacts of the social security reform. To do so, we construct a countrafactual scenario of the Chilean economy under the PAYG system using simulations methods and we compare it with the effective data occurred under the IA system. We discuss the fiscal impacts, plus pension coverage on the elderly and the PAYG system's macroeconomics impacts by comparing them with the actual evolution of the Chilean economy under the IA system. Our simulations show significant fiscal deficits in the PAYG plus relatively lower pension coverage and modest benefits compare to the IA system. Finally, we show that the pension reform might have had significant macroeconomic impacts.

Understanding the motives that underlie Spaniards’ retirement saving decisions is important because many, if not most, future retirees will need to rely on personal savings to maintain a decent standard of living. The governor of the Bank of Spain has stated recently that the current public pension system will not guarantee an adequate pension to the citizens, advising to save now for retirement. In this debate on public pensions, and the complementary role that private pensions might play in Spain, this article has shed light on the decision of Spanish households to engage in individual pension plans and it has identified which factors determine the total amount saved in such retirement plans. Using micro data from the Bank of Spain (Survey of Household Finances 2011), the analysis has revealed that the expectations of lower future income, along with preferences for the financial risk and education, exert an important influence on the likelihood of enrolling in a private pension plan. University education minimizes the myopic behavior of households in the sense of making them more forward-looking and cautious in the face of their future well-being. Additionally using Heckman’s methodology to correct for the problem of selection bias, our results have revealed that liquidity constraints affect negatively the total amount of money saved for retirement.

Este trabajo desarrolla un modelo de simulación para estimar el flujo de caja de un pensionado que tiene su cuenta individual en una administradora de fondos de pensiones (AFP) colombiana. Aquel se proyecta a partir de las sendas salariales y densidades de cotización estimadas por la Dirección de Estudios Económicos del Departamento Nacional de Planeación (DNP) y, con base en lo anterior, se calcula el valor de la pensión que se podría obtener a partir de la riqueza acumulada al final de la vida laboral. Los resultados muestran que, de no adoptar medidas encaminadas a aumentar las densidades y las tasas de cotización, un gran porcentaje de la fuerza laboral obtendría pensiones inferiores a la mínima establecida por ley, pero no cumpliría con los requisitos para acceder a la garantía estatal para obtener la misma.

This study introduces a comprehensive evaluation tool to study the performance of pension schemes. The Pension Scheme Performance Index (PSP-Index) suggests the following factors: education infrastructure growth rate (∆V1), training program growth rate (∆V2), diet improvement growth rate (∆V3), health coverage growth rate (∆V4), life expectancy growth rate (∆V5), pension coverage growth rate (∆V6), labor market demand growth rate (∆V7), total tax collection growth rate (∆V8), and capital expansion growth rate (V9). PSP-index attempts at the standardization of performance measures that have typically applied in pension schemes irrespective of their type and level of development. The model investigates pension scheme performance of five ASEAN-member countries—Singapore, Malaysia, Indonesia, Thailand, and Philippines.

ABSTRACT : In non-financial defined contribution (NDC) pension systems the contribution rate is kept at a constant level. A key element is the balance mechanism which is automatically applied if the finances appear insufficient. The balance mechanism is based on the ratio of assets to liabilities. When the ratio is below unity, it will slow down the indexation of both notional pension accounts and pension benefits. Thus the burden of adjustment will fall on replacement rates, but when and how, depends on what the demographic and economic future will contain. We apply the balance mechanism to the Finnish private-sector earnings-related pension system and simulate the future with stochastic population projections and asset yields. The results show that depending on the contribution rate level, a direct application of the balance mechanism may turn out to be a slow way of running down the system, or end up with huge funds. The problems may appear very far in the future. Scaling the bal...

This paper reflects on the ongoing challenges presented by certain employers who, whilst deducting occupational retirement fund contributions from their employees' salaries, fail to pay over those contributions to the relevant occupational retirement funds. These employers also often fail to register themselves or their employees as participating members of occupational retirement funds when they are supposed to. Such failures to register with the relevant occupational retirement funds and to pay over fund contributions have disastrous effects on the employees who are at the receiving end of these unlawful practices. This is the case because employees lose the value and use of their salaries through the deductions, and also the benefits of their occupational retirement funds.Although the Pension Funds Act 24 of 1956 is sufficiently responsive and provides adequate mechanisms to guide against this scourge, it is this paper's argument that occupational retirement funds themsel...

One of the most important consequences of the Chilean pension reform undertaken in the early 1980s was to transfer a significant portion of the risk associated to the financing of pensions, from the State, to the pension fund participants of the newly established compulsory pension system. This paper is concerned with the risk embedded in the portfolio strategies of pension fund portfolio managers. We develop an analytic framework that permits to incorporate the behavior of a pension fund manager in the long-term risk assessment of its investment strategy, where the latter is conducted from the point of view of the pension fund participant, who has preferences over his/her final pension. The pension fund manager's problem is cast as a dynamic portfolio choice problem, and its solution is used afterwards to quantify the risk exposure of the pension fund participant. Our results from a simulation exercise show that the lower is the risk aversion of the participant, the higher is his/her Wealth-at-Risk-defined as the monetary compensation that leaves the participant indifferent with respect to his/her outside option-a result that is due to the fact that the outside option increases relatively more than the benefit derived from the pension provided by the fund manager. The same logic is behind the negative relationship between stock return volatility and pension risk.

Demographic transition toward older populations is turning old age income support into an issue of high and growing importance throughout Asia. Population aging is most advanced in the sub-regions of East Asia and Southeast Asia. In this paper, we analyze the current state of public pension systems of China, Indonesia, Korea, Malaysia, Philippines, Singapore, Thailand and Vietnam. Our diagnosis of public pension systems reveals their main shortcomings. The key systemic weaknesses include low coverage and inadequate benefits. Overall, Asian public pension systems still have a long way to go in terms of affordable, adequate and sustainable old age economic security. We conclude the paper with policy recommendations for pension reform.

Rising elderly life expectancies imply the need to accumulate sufficient savings for retirement. This paper investigates the role of recent changes in the investment menu of the Singaporean Central Provident Fund (CPF) system. Our research explores the investment patterns of CPF participants and articulates their implications for policymakers. We find that most investors use their money for housing purchase and default the remainder to the CPF investment pool. The bulk of non-housing saving sits in bank accounts paying a low return. A fraction of workers does elect outside investment products, with high-income earners and males taking more risk than low-income earners and females. Since workers who default their money to the CPF fund receive a guaranteed 2.5% return on the Ordinary Account and 4% on the Special Account, hurdle rates for money market and equity funds are substantial. These high hurdle rates help explain why few CPF account holders invest outside the default governmen...

National defined contribution pension systems have long been a mainstay of retirement income in Asia. One of the oldest and best known of these systems is the Singaporean Central Provident Fund, a mandatory retirement scheme managed by the central government for almost a half-century. With required contribution rates that have ranged up to 50%, this program has powerfully shaped asset accumulation patterns and housing portfolios. This paper explores how the structure and design of the Singaporean retirement and housing schemes influence wealth levels and asset mix at retirement. Our model indicates that outcomes rest critically on the interlinked national retirement and housing programs. We show that policies to enhance one program may boost retirement replacement rates but can also lower total wealth in unexpected ways. The lessons we draw may serve as guidance for other countries constructing a national defined contribution retirement system.

Incomplete and highly fragmented work histories threaten to leave many contributors of the pension schemes in Latin America without the minimum pension guarantee or even without access to the ordinary pension. We propose a methodology to assess this risk, identify vulnerable groups and study potential determinants of the history of contributions using information from the work history records of the social security institutions. We apply this methodology to the largest social security institution of Uruguay, the Banco de Previsión Social (BPS), and show that the majority of contributors to this institution might not comply with the minimum number of years of contribution that is currently required to access an ordinary pension when they reach the retirement age.

Knowledge of the distribution function of the stochastically compounded value of a series of future (positive and/or negative) payments is needed for solving several problems in an insurance or finance environment, see e.g. Dhaene et al. (2002 a,b). In , convex lower bound approximations for such a sum have been proposed. In case of changing signs of the payments however, the distribution function or the quantiles of the lower bound are not easy to determine, as the approximation for the random compounded value of the payments will in general not be a comonotonic sum.