By Robert Holzmann

ISBN-10: 0821377809

ISBN-13: 9780821377802

ISBN-10: 0821377817

ISBN-13: 9780821377819

The previous transition international locations of crucial, japanese, and Southern Europe (CESE) inherited outlined gain public pension platforms financed on a pay-as-you-go foundation. below critical making plans, those platforms exhibited economic lines which worsened through the early years of the transition and have become unsustainable lower than a industry economic climate and projected inhabitants getting older. All CESE nations brought reforms that various in regards to the alternative among parametric and systemic reforms and over the creation of investment yet regularly concerned with problems with sustainability instead of profit adequacy. to evaluate gain adequacy of the reformed platforms opposed to the central of long term monetary sustainability person reviews for 9 CESE nations Bulgaria, Czech Republic, Croatia, Hungary, Poland, Romania, Slovakia, Slovenia, and Serbia were ready. gain adequacy is thereby assessed by way of the gross and internet alternative premiums for regular kingdom stipulations approximated by way of the yr 2040 for either source of revenue and contribution checklist size of the insured. those 9 case reports plus a precis are compiled during this booklet suggesting the next extensive coverage conclusions: (i) monetary sustainability has more desirable in so much research nations, yet few are absolutely ready for the inevitability of inhabitants getting older; (ii) the linkage among contributions and advantages has been reinforced, and pension procedure designs are greater suited for marketplace stipulations; (iii) degrees of source of revenue substitute are quite often sufficient for all yet a few different types of staff (including people with intermittent formal region employment or low lifetime wages) - addressing their wishes would require macro and microeconomic tasks that transcend pension coverage; (iv) extra reforms to deal with inhabitants getting older should still concentrate on extending exertions strength participation through the aged to prevent gain cuts that can undermine adequacy and intensely excessive contribution charges that can discourage formal quarter employment; and (v) extra decisive monetary industry reforms are wanted for funded provisions to convey at the go back expectancies of individuals.

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Extra info for Adequacy of Retirement Income after Pension Reforms in Central, Eastern and Southern Europe: Eight Country Studies (Directions in Development; Finance)

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This finding, however, does not imply that mandatory first-pillar pension schemes should actually target an 80 percent net replacement rate. 6 There is also some evidence to suggest that the ratio between pre- and postretirement income is somewhat independent of the income replacement mandate of the public pension system. Put simply, individuals tend to save more in countries with more modest mandates (and vice versa). Because mechanisms for saving—such as voluntary pension schemes– exist in all of the study countries, it would seem reasonable to expect middle- and higher-income workers to save enough to finance at least 25 percent, if not closer to 50 percent, of this 80 percent income replacement target.

Some countries (such as Croatia and the Slovak Republic) but not others impose vesting periods on second-pillar benefits. Because defined contribution schemes are, by construction, actuarially fair, vesting periods for second-pillar schemes are theoretically unnecessary; it is possible that they are imposed for administrative reasons or out of the desire for consistency with first-pillar rules. In practice, vesting periods tend to reduce incentives to enroll in voluntary schemes as well as the effectiveness of an actuarially fair structure with regard to labor supply decisions.

VESTING PERIODS. Vesting periods (that is, the minimum period of contributory service needed to qualify for a pension upon reaching the minimum or normal retirement age) are typical of traditional defined-benefit schemes. They serve to prevent a form of arbitrage in which people work for only a few years to become eligible for a minimum (in some cases, a flat) benefit worth far more than the contributions they paid toward their benefits. In actuarially fair pension systems (that is, systems in which the lifetime value of a person’s benefits is, by design, roughly equal on average to the lifetime value of his or her contributions), vesting periods are unnecessary, except for determining eligibility for a minimum pension.

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Adequacy of Retirement Income after Pension Reforms in Central, Eastern and Southern Europe: Eight Country Studies (Directions in Development; Finance) by Robert Holzmann


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