KALAMAZOO, Mich.—Reforms to social security and pension systems are being undertaken in a variety... more KALAMAZOO, Mich.—Reforms to social security and pension systems are being undertaken in a variety of nations around the world, not just in Europe and North America. Many of these nations are motivated by aging population and declining birth rates, but reforms are also occurring because of economic development, particularly in areas such as China, the Americas, and parts of Africa. A new book from the Upjohn Press provides a detailed overview of many such reforms occurring in nations around the world. Social Security and Pension Reform: International Perspectives, Marek Szczepanski and John A. Turner, editors, should prove to be an often-used resource for anyone interested in how social security and voluntary and employer-provided pension systems are evolving in differing regions and economic systems. Contributors to the book highlight trends among some countries, such as the adoption of fluctuating automatic mechanisms for maintaining social security solvency, raising the minimum ag...
Longevity insurance benefits are deferred annuities that start payment at an advanced age at whic... more Longevity insurance benefits are deferred annuities that start payment at an advanced age at which a substantial proportion of the birth cohort has died. In high-income countries, that would mean that these annuities would start for people in their early 80s, but when social security programs were starting in many countries, the age at which longevity insurance annuities would start was substantially younger. Originally, public pension programs in a number of countries were structured as a longevity insurance program, with roughly 50% of those entering the workforce surviving to receive the benefits because of relatively high benefit eligibility ages. Over time, however, as life expectancy has improved, the benefits these programs provide have slowly transformed into benefits that most people entering the work force ultimately receive. This paper argues that reintroduction of a longevity insurance benefit as part of public pensions could be an important policy in particular because this benefit is generally not provided by the private sector. These annuities would benefit some older retirees, particularly in countries with modest public pension benefits, but the private sector has problems in providing them, particularly when they must be provided on a unisex basis. This chapter surveys countries that provide this type of benefit and also considers proposals for the provision of this benefit in the United States and Canada. The addition of these benefits to social security may be particularly desirable as part of a reform where other changes being made to maintain solvency are resulting in reduced generosity of benefits.
The aim of this study is to analyse longevity insurance annuities as a possible addition to socia... more The aim of this study is to analyse longevity insurance annuities as a possible addition to social security programmes. The research method is to analyse the strengths and weaknesses of longevity insurance provided by the private sector and by government, and to survey and analyse examples of longevity insurance benefit programmes that countries have already established. Longevity insurance annuities are deferred annuities that start payment at an advanced age at which a substantial proportion of the birth cohort has died. In developed countries, that would mean that these annuities would start for people in their early eighties, but when social security programmes were started in many countries, the age at which longevity insurance annuities would begin was substantially younger. This study finds that originally, public pension programmes in a number of countries were structured as a longevity insurance programme, with roughly 50% of those entering the workforce surviving to receiv...
International Journal of Economics and Finance, 2020
War has affected the development of social security and employer-provided pensions. Roman soldier... more War has affected the development of social security and employer-provided pensions. Roman soldiers received the first pensions. In most countries, military pensions preceded social security pensions, providing countries experience with the concept and administration of pensions. War or the threat of war affected the development of the two major branches of social insurance-based pensions—Bismarckian (earnings related pensions developed in Germany) and Beveridgian (pensions tied to years of work developed in the United Kingdom). War has affected the choice countries make between funded and unfunded or pay-as-you-go pensions. The money in funded social security pensions can be expropriated to finance wars. Periods of hyperinflation following wars have destroyed funded social security pensions and funded employer-provided pensions in some countries. A victor country can have a major effect on the pensions in a defeated country. Social security pensions can be used to encourage national...
Practical Applications Summary Elderly poverty has been a vexing challenge for U.S. policymakers ... more Practical Applications Summary Elderly poverty has been a vexing challenge for U.S. policymakers for years. As people age, they face a myriad of financial challenges, such as the cost of caring for an ill spouse, that can erode the nest eggs they spent decades building. As a result, the poverty rate for people 75 and older is higher than for people aged 65 and older. Ireland and Poland have addressed the problem by providing financial help to people aged 75 and older and aged 80 and older, respectively. As a result, both countries have poverty rates among citizens aged 75 and older that are equal to or lower than poverty rates for persons aged 65 and older. In Improving Pension Income and Reducing Poverty at Advanced Older Ages: Longevity Insurance Benefits in Ireland and Poland as Models for the United States, which appeared in the Winter 2017 issue of The Journal of Retirement, John Turner, director of the Pension Policy Center, Gerard Hughes of Ireland's Trinity Business School, Agnieszka Chłoń-Domińczak of the Warsaw School of Economics, and David M. Raines of the U.S. Social Security Administration, examined the approaches taken by Ireland and Poland to combat elderly poverty and considered how those approaches might be applicable to the U.S. and Canada.
An extensive amount of literature examines the impact of expectations on economic behavior at bot... more An extensive amount of literature examines the impact of expectations on economic behavior at both the micro and macro level. In the area of individual financial security, research taking into account the difference between rational expectations and actual behavioral expectations regarding asset returns, inflation, savings, and spending has contributed to better understanding and improved program design. In contrast, relatively little attention has been paid to workers’ expectations of their future Social Security benefits. Because Social Security benefits are an important source of retirement income for most workers in many countries, future Social Security benefit expectations presumably play an important role in their consumption, saving, labor supply, and portfolio investment decisions. This article surveys the literature relating to these expectations and presents evidence of workers’ expectations of future Social Security benefits in Canada, Ireland, and the United States. In ...
In the United States, poverty rates increase at advanced older ages, a trend absent from Ireland ... more In the United States, poverty rates increase at advanced older ages, a trend absent from Ireland and Poland. This article discusses the Age 80 Allowance in Ireland for persons aged 80 and older and the Care Allowance in Poland for persons aged 75 and older as longevity insurance benefit programs that reduce poverty at advanced older ages. Both Ireland and Poland have poverty rates for persons aged 75 and older that are equal to or lower than for persons aged 65 and older. The article discusses proposals for longevity insurance benefits as part of Social Security in the United States and Canada.
This article surveys reforms of social security programs in four countries whose experiences may ... more This article surveys reforms of social security programs in four countries whose experiences may be relevant for the United States when it considers what changes to make to help ensure future solvency and to address other issues concerning the provision of benefits through the Social Security Old-Age and Survivors Insurance (OASI) program. It discusses reforms to social security programs in Canada, Germany, Sweden, and the United Kingdom. The article focuses on reforms that may provide useful examples for U.S. policymakers.
Also available via the InternetAvailable from British Library Document Supply Centre-DSC:3597.571... more Also available via the InternetAvailable from British Library Document Supply Centre-DSC:3597.5718(0202) / BLDSC - British Library Document Supply CentreSIGLEGBUnited Kingdo
Many mandatory defined contribution systems provide a rate of return guarantee. The guarantees pr... more Many mandatory defined contribution systems provide a rate of return guarantee. The guarantees provided have generally been backed by a sequential combination of two or more of six different financing sources. Those sources are (1) reserve funds established within the pension fund, using investment earnings on the fund; (2) reserve funds established using funds provided by the owners of the pension fund management companies; (3) a defined benefit plan associated with the defined contribution plan; (4) central guarantee funds financed by contributions from pension funds; (5) funds provided by employers; and (6) the government. Nearly all the guarantees are first backed by a limited liability guarantee derived from investment earnings that would otherwise accrue to workers. In some instances, the guarantee may be funded by employers. Then they are backed by a guarantee financed by capital market institutions — pension fund managers directly or a central guarantee fund. Lastly, they ar...
This article examines the development of Japanese voluntary employer-sponsored retirement plans w... more This article examines the development of Japanese voluntary employer-sponsored retirement plans with an emphasis on recent trends. Until 2001, companies in Japan offered retirement benefits as lump-sum severance payments and/or benefits from one of two types of defined benefit (DB) pension plans. One type of DB plan was based on the occupational pension model used in the United States before the adoption of the Employee Retirement Income Security Act of 1974 (ERISA), but lacked the funding, vesting, and other protective features contained in ERISA. The other type of DB plan allowed companies to opt out of the earnings-related portion of social security, commonly referred to as "contracting out." Landmark laws passed in 2001 introduced a new generation of occupational retirement plans to employers and employees. One law increased funding requirements and enhanced employee protections for employer-sponsored DB plans, while a second law introduced defined contribution (DC) pl...
KALAMAZOO, Mich.—Reforms to social security and pension systems are being undertaken in a variety... more KALAMAZOO, Mich.—Reforms to social security and pension systems are being undertaken in a variety of nations around the world, not just in Europe and North America. Many of these nations are motivated by aging population and declining birth rates, but reforms are also occurring because of economic development, particularly in areas such as China, the Americas, and parts of Africa. A new book from the Upjohn Press provides a detailed overview of many such reforms occurring in nations around the world. Social Security and Pension Reform: International Perspectives, Marek Szczepanski and John A. Turner, editors, should prove to be an often-used resource for anyone interested in how social security and voluntary and employer-provided pension systems are evolving in differing regions and economic systems. Contributors to the book highlight trends among some countries, such as the adoption of fluctuating automatic mechanisms for maintaining social security solvency, raising the minimum ag...
Longevity insurance benefits are deferred annuities that start payment at an advanced age at whic... more Longevity insurance benefits are deferred annuities that start payment at an advanced age at which a substantial proportion of the birth cohort has died. In high-income countries, that would mean that these annuities would start for people in their early 80s, but when social security programs were starting in many countries, the age at which longevity insurance annuities would start was substantially younger. Originally, public pension programs in a number of countries were structured as a longevity insurance program, with roughly 50% of those entering the workforce surviving to receive the benefits because of relatively high benefit eligibility ages. Over time, however, as life expectancy has improved, the benefits these programs provide have slowly transformed into benefits that most people entering the work force ultimately receive. This paper argues that reintroduction of a longevity insurance benefit as part of public pensions could be an important policy in particular because this benefit is generally not provided by the private sector. These annuities would benefit some older retirees, particularly in countries with modest public pension benefits, but the private sector has problems in providing them, particularly when they must be provided on a unisex basis. This chapter surveys countries that provide this type of benefit and also considers proposals for the provision of this benefit in the United States and Canada. The addition of these benefits to social security may be particularly desirable as part of a reform where other changes being made to maintain solvency are resulting in reduced generosity of benefits.
The aim of this study is to analyse longevity insurance annuities as a possible addition to socia... more The aim of this study is to analyse longevity insurance annuities as a possible addition to social security programmes. The research method is to analyse the strengths and weaknesses of longevity insurance provided by the private sector and by government, and to survey and analyse examples of longevity insurance benefit programmes that countries have already established. Longevity insurance annuities are deferred annuities that start payment at an advanced age at which a substantial proportion of the birth cohort has died. In developed countries, that would mean that these annuities would start for people in their early eighties, but when social security programmes were started in many countries, the age at which longevity insurance annuities would begin was substantially younger. This study finds that originally, public pension programmes in a number of countries were structured as a longevity insurance programme, with roughly 50% of those entering the workforce surviving to receiv...
International Journal of Economics and Finance, 2020
War has affected the development of social security and employer-provided pensions. Roman soldier... more War has affected the development of social security and employer-provided pensions. Roman soldiers received the first pensions. In most countries, military pensions preceded social security pensions, providing countries experience with the concept and administration of pensions. War or the threat of war affected the development of the two major branches of social insurance-based pensions—Bismarckian (earnings related pensions developed in Germany) and Beveridgian (pensions tied to years of work developed in the United Kingdom). War has affected the choice countries make between funded and unfunded or pay-as-you-go pensions. The money in funded social security pensions can be expropriated to finance wars. Periods of hyperinflation following wars have destroyed funded social security pensions and funded employer-provided pensions in some countries. A victor country can have a major effect on the pensions in a defeated country. Social security pensions can be used to encourage national...
Practical Applications Summary Elderly poverty has been a vexing challenge for U.S. policymakers ... more Practical Applications Summary Elderly poverty has been a vexing challenge for U.S. policymakers for years. As people age, they face a myriad of financial challenges, such as the cost of caring for an ill spouse, that can erode the nest eggs they spent decades building. As a result, the poverty rate for people 75 and older is higher than for people aged 65 and older. Ireland and Poland have addressed the problem by providing financial help to people aged 75 and older and aged 80 and older, respectively. As a result, both countries have poverty rates among citizens aged 75 and older that are equal to or lower than poverty rates for persons aged 65 and older. In Improving Pension Income and Reducing Poverty at Advanced Older Ages: Longevity Insurance Benefits in Ireland and Poland as Models for the United States, which appeared in the Winter 2017 issue of The Journal of Retirement, John Turner, director of the Pension Policy Center, Gerard Hughes of Ireland's Trinity Business School, Agnieszka Chłoń-Domińczak of the Warsaw School of Economics, and David M. Raines of the U.S. Social Security Administration, examined the approaches taken by Ireland and Poland to combat elderly poverty and considered how those approaches might be applicable to the U.S. and Canada.
An extensive amount of literature examines the impact of expectations on economic behavior at bot... more An extensive amount of literature examines the impact of expectations on economic behavior at both the micro and macro level. In the area of individual financial security, research taking into account the difference between rational expectations and actual behavioral expectations regarding asset returns, inflation, savings, and spending has contributed to better understanding and improved program design. In contrast, relatively little attention has been paid to workers’ expectations of their future Social Security benefits. Because Social Security benefits are an important source of retirement income for most workers in many countries, future Social Security benefit expectations presumably play an important role in their consumption, saving, labor supply, and portfolio investment decisions. This article surveys the literature relating to these expectations and presents evidence of workers’ expectations of future Social Security benefits in Canada, Ireland, and the United States. In ...
In the United States, poverty rates increase at advanced older ages, a trend absent from Ireland ... more In the United States, poverty rates increase at advanced older ages, a trend absent from Ireland and Poland. This article discusses the Age 80 Allowance in Ireland for persons aged 80 and older and the Care Allowance in Poland for persons aged 75 and older as longevity insurance benefit programs that reduce poverty at advanced older ages. Both Ireland and Poland have poverty rates for persons aged 75 and older that are equal to or lower than for persons aged 65 and older. The article discusses proposals for longevity insurance benefits as part of Social Security in the United States and Canada.
This article surveys reforms of social security programs in four countries whose experiences may ... more This article surveys reforms of social security programs in four countries whose experiences may be relevant for the United States when it considers what changes to make to help ensure future solvency and to address other issues concerning the provision of benefits through the Social Security Old-Age and Survivors Insurance (OASI) program. It discusses reforms to social security programs in Canada, Germany, Sweden, and the United Kingdom. The article focuses on reforms that may provide useful examples for U.S. policymakers.
Also available via the InternetAvailable from British Library Document Supply Centre-DSC:3597.571... more Also available via the InternetAvailable from British Library Document Supply Centre-DSC:3597.5718(0202) / BLDSC - British Library Document Supply CentreSIGLEGBUnited Kingdo
Many mandatory defined contribution systems provide a rate of return guarantee. The guarantees pr... more Many mandatory defined contribution systems provide a rate of return guarantee. The guarantees provided have generally been backed by a sequential combination of two or more of six different financing sources. Those sources are (1) reserve funds established within the pension fund, using investment earnings on the fund; (2) reserve funds established using funds provided by the owners of the pension fund management companies; (3) a defined benefit plan associated with the defined contribution plan; (4) central guarantee funds financed by contributions from pension funds; (5) funds provided by employers; and (6) the government. Nearly all the guarantees are first backed by a limited liability guarantee derived from investment earnings that would otherwise accrue to workers. In some instances, the guarantee may be funded by employers. Then they are backed by a guarantee financed by capital market institutions — pension fund managers directly or a central guarantee fund. Lastly, they ar...
This article examines the development of Japanese voluntary employer-sponsored retirement plans w... more This article examines the development of Japanese voluntary employer-sponsored retirement plans with an emphasis on recent trends. Until 2001, companies in Japan offered retirement benefits as lump-sum severance payments and/or benefits from one of two types of defined benefit (DB) pension plans. One type of DB plan was based on the occupational pension model used in the United States before the adoption of the Employee Retirement Income Security Act of 1974 (ERISA), but lacked the funding, vesting, and other protective features contained in ERISA. The other type of DB plan allowed companies to opt out of the earnings-related portion of social security, commonly referred to as "contracting out." Landmark laws passed in 2001 introduced a new generation of occupational retirement plans to employers and employees. One law increased funding requirements and enhanced employee protections for employer-sponsored DB plans, while a second law introduced defined contribution (DC) pl...
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