By Nicholas Barr This paper discusses the strategic building blocks of pension reform. The early sections set out the simple economics of pensions and discuss a series of myths which have proved remarkably persistent. Get the book HERE!
By Michal Andrle (International Monetary Fund (IMF)), Shafik Hebous (International Monetary Fund), Alvar Kangur (International Monetary Fund (IMF)), Mehdi Raissi (International Monetary Fund (IMF) - Asia and Pacific Department) Published in late 2017, the Italian medium-term fiscal plan aims to achieve structural balanceby 2020, although concrete, high-quality measures to meet the target are yet to be specified.This paper seeks to contribute to the discussion by: (i) assessing spending patterns to identifyareas for savings (ii) evaluating the pension system (iii) analyzing the scope for...
By Oliver Pamp Oliver Pamp analyzes the likelihood and extent of pension reforms from a political-economy perspective. It is shown that voters preferences for or against reforms are influenced by a societies demographic development, the generosity of its existing public pension scheme and its electoral system. The author extensively reviews existing formal models of pension systems, discusses their merits and limitations, and develops a three-period overlapping generations model. The models insights regarding individual reform preferences are then put into the...
By Neil Gilbert Aging populations are creating tremendous pressures on social security systems throughout the world, lifting the need for reform to the top of policy agendas. Proposed reforms often have different implications for men and women. At the same time, traditional family and gender roles are changing with the decline in fertility rates and the rapid rise in women's participation in the paid labor force.While trying to adapt social security systems to the fiscal demands of aging societies, policymakers...
By Axel H. Börsch-Supan, Klaus Härtl, Duarte N. Leite In response to the challenges of increasing longevity, an obvious policy response is to gradually increase the statutory eligibility age for public pension benefits and to shut down pathways to early retirement such as special rules for women. This is, however, very unpopular. As an alternative, many countries have introduced “flexibility reforms” which allow combining part-time work and partial retirement. A key measure of these reforms is the abolishment of earnings...
By Bernhard Ebbinghaus, Elias Naumann Studying the political economy of welfare state reform, this edited collection focuses on the role of public opinion and organized interests in respect to policy change. It highlights that welfare states are hard pressed to reform in order to cope with ongoing socio-economic and demographic challenges. While public opinion is commonly seen to oppose welfare cuts and organized interests such as trade unions have tended to defend acquired social rights, this book shows that there...
By Giulia Bovini (London School of Economics & Political Science (LSE) - Department of Economics) This paper studies life-cycle labour supply responses to lower social security wealth. An over-arching pension reform implemented in Italy in 1995 (the Dini pension reform) provides the setting for the analysis. While ushering the transition from a defined-benefit (DB) to a notional defined-contribution (NDC) scheme, it introduced discontinuities in the social security replacement rate based uniquely on years of qualifying retirement contributions accrued by the...
By Olga Malkova (University of Kentucky - Department of Economics) This study quantifies the effects of Soviet Russia’s 1960s reforms that gradually reduced the tax rate on pensions of employed pensioners from seventy-four to zero percent, and of the 1971 reform that substantially increased the minimum pension. The differential group eligibility and regional implementation allow me to use a differences-in-differences framework. Within a year after the tax rate fell from seventy-four to forty-one percent, employment rates rose by twenty-seven percent,...
By William B. P. Robson (C.D. Howe Institute) Tax rules limiting the amount of tax deferral available to Canadians in various retirement saving vehicles need some measure of equivalency among them. Since 1990 this measure has been the Factor of Nine, based on the proposition that saving 9 percent of annual earnings will let a person buy a retirement annuity equal to 1 percent of pre-retirement income. A quarter century later, the flaws in the Factor of Nine are glaring...
By Marika Santoro (International Monetary Fund) In this paper, we study the macroeconomic impact of pension reform options in Chile, using a dynamic general equilibrium model. The main reform proposal considers raising contributions (employer side) and vehicle additional proceeds to individual accounts and to increase the support of solidarity pensions. We model increased contributions as a labor tax. We find the impact of this reform on GDP to be negative in the near to the medium run, with GDP declining...
