Transition : Paying for a Shift from Pay-as-You-Go Financing to Funded Pensions
There is a widespread perception that public pension systems in richer countries are in crisis. As schemes mature and the population ages, the burden of financing pensions has grown and, on current policies, will rise much further. Developing count...
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| Format: | Brief |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2005/01/6266699/transition-paying-shift-pay-as-you-go-financing-funded-pensions http://hdl.handle.net/10986/11242 |
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okr-10986-112422021-04-23T14:02:54Z Transition : Paying for a Shift from Pay-as-You-Go Financing to Funded Pensions World Bank ACCOUNTING ADMINISTRATIVE COSTS ADVERSE SELECTION ASSET SALES BALANCE SHEET BENEFIT LEVEL BORROWING CONTRIBUTION RATE CONTRIBUTION RATES DEBT FINANCING DEFICIT FINANCING DEFICITS FINANCIAL MARKETS FINANCIAL SECTOR FISCAL POLICIES FISCAL POLICY FISCAL RETRENCHMENT FUNDED ACCOUNTS FUNDED COMPONENT FUNDED PENSION SYSTEMS FUNDED PENSIONS FUNDED SCHEMES FUNDED SYSTEMS GDP GOVERNMENT ASSETS GOVERNMENT BONDS GOVERNMENT BUDGET GOVERNMENT DEBT GOVERNMENT GUARANTEES GROSS DOMESTIC PRODUCT INDEXATION INDIVIDUAL ACCOUNTS INSURANCE INTEREST RATE INVESTMENT RETURNS LABOR MARKETS MANDATORY SAVINGS PENSION COSTS PENSION DEBT PENSION FUND PENSION FUND MANAGEMENT PENSION FUND MANAGERS PENSION FUNDS PENSION LIABILITIES PENSION PLAN PENSION REFORM PENSION REFORMS PENSION RESERVES PENSION RIGHTS PENSION SYSTEM PENSION SYSTEMS PENSIONERS PERSONAL PENSIONS PRIVATE PROPERTY PRIVATIZATION PUBLIC SECTOR PUBLIC SECTOR DEBT PUBLIC SPENDING REPLACEMENT RATE RETIREES RETIREMENT RETIREMENT AGE RETIREMENT BENEFITS SAVINGS RATES SOCIAL PROTECTION SOCIAL SECURITY TAX TAX RATES TAXATION TREASURY VALUATION WAGE GROWTH There is a widespread perception that public pension systems in richer countries are in crisis. As schemes mature and the population ages, the burden of financing pensions has grown and, on current policies, will rise much further. Developing countries are younger and pension systems relatively immature. But the transformation in demographics and pension benefits that took over a century in richer nations is forecast to take less than 30 years in developing economies. The Bank has argued that a 'three-pillar' pension system can mitigate emerging problems in developing countries' public pension systems. The recommended system, set out in Averting the Old Age Crisis consists of 'a publicly managed system with mandatory participation and the limited goal of reducing poverty among the old; a privately managed mandatory savings system; and voluntary savings'. The note compares funded and pay-as-you-go finance of retirement incomes, highlighting the transition double burden, and, stipulates size of the transition will depend on the starting point: How generous is the current pay-as-you-go pension promise? How mature is the pay-as-you-go pension system? What is the age structure of the population? Transition costs can be controlled by a number of policies: Limiting the coverage of the funded program to new labor-market entrants or younger workers spreads the transition cost over a longer period; Scaling down existing pay-as-you-go liabilities is likely to play an important part in any fundamental pension reform; Governments can share in any extra returns to the funded system and use them to help pay for the transition cost. Countries have in practice used a mix of strategies. The precise balance between debt and budgetary finance (spending cuts or tax increases) should be chosen in the general context of a country's fiscal policy. 2012-08-13T14:32:36Z 2012-08-13T14:32:36Z 2005-01 http://documents.worldbank.org/curated/en/2005/01/6266699/transition-paying-shift-pay-as-you-go-financing-funded-pensions http://hdl.handle.net/10986/11242 English World Bank Pension Reform Primer Series CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Brief Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCOUNTING ADMINISTRATIVE COSTS ADVERSE SELECTION ASSET SALES BALANCE SHEET BENEFIT LEVEL BORROWING CONTRIBUTION RATE CONTRIBUTION RATES DEBT FINANCING DEFICIT FINANCING DEFICITS FINANCIAL MARKETS FINANCIAL SECTOR FISCAL POLICIES FISCAL POLICY FISCAL RETRENCHMENT FUNDED ACCOUNTS FUNDED COMPONENT FUNDED PENSION SYSTEMS FUNDED PENSIONS FUNDED SCHEMES FUNDED SYSTEMS GDP GOVERNMENT ASSETS GOVERNMENT BONDS GOVERNMENT BUDGET GOVERNMENT DEBT GOVERNMENT GUARANTEES GROSS DOMESTIC PRODUCT INDEXATION INDIVIDUAL ACCOUNTS INSURANCE INTEREST RATE INVESTMENT RETURNS LABOR MARKETS MANDATORY SAVINGS PENSION COSTS PENSION DEBT PENSION FUND PENSION FUND MANAGEMENT PENSION FUND MANAGERS PENSION FUNDS PENSION LIABILITIES PENSION PLAN PENSION REFORM PENSION REFORMS PENSION RESERVES PENSION RIGHTS PENSION SYSTEM PENSION SYSTEMS PENSIONERS PERSONAL PENSIONS PRIVATE PROPERTY PRIVATIZATION PUBLIC SECTOR PUBLIC SECTOR DEBT PUBLIC SPENDING REPLACEMENT RATE RETIREES RETIREMENT RETIREMENT AGE RETIREMENT BENEFITS SAVINGS RATES SOCIAL PROTECTION SOCIAL SECURITY TAX TAX RATES TAXATION TREASURY VALUATION WAGE GROWTH |
| spellingShingle |
ACCOUNTING ADMINISTRATIVE COSTS ADVERSE SELECTION ASSET SALES BALANCE SHEET BENEFIT LEVEL BORROWING CONTRIBUTION RATE CONTRIBUTION RATES DEBT FINANCING DEFICIT FINANCING DEFICITS FINANCIAL MARKETS FINANCIAL SECTOR FISCAL POLICIES FISCAL POLICY FISCAL RETRENCHMENT FUNDED ACCOUNTS FUNDED COMPONENT FUNDED PENSION SYSTEMS FUNDED PENSIONS FUNDED SCHEMES FUNDED SYSTEMS GDP GOVERNMENT ASSETS GOVERNMENT BONDS GOVERNMENT BUDGET GOVERNMENT DEBT GOVERNMENT GUARANTEES GROSS DOMESTIC PRODUCT INDEXATION INDIVIDUAL ACCOUNTS INSURANCE INTEREST RATE INVESTMENT RETURNS LABOR MARKETS MANDATORY SAVINGS PENSION COSTS PENSION DEBT PENSION FUND PENSION FUND MANAGEMENT PENSION FUND MANAGERS PENSION FUNDS PENSION LIABILITIES PENSION PLAN PENSION REFORM PENSION REFORMS PENSION RESERVES PENSION RIGHTS PENSION SYSTEM PENSION SYSTEMS PENSIONERS PERSONAL PENSIONS PRIVATE PROPERTY PRIVATIZATION PUBLIC SECTOR PUBLIC SECTOR DEBT PUBLIC SPENDING REPLACEMENT RATE RETIREES RETIREMENT RETIREMENT AGE RETIREMENT BENEFITS SAVINGS RATES SOCIAL PROTECTION SOCIAL SECURITY TAX TAX RATES TAXATION TREASURY VALUATION WAGE GROWTH World Bank Transition : Paying for a Shift from Pay-as-You-Go Financing to Funded Pensions |
| relation |
World Bank Pension Reform Primer Series |
| description |
There is a widespread perception that
public pension systems in richer countries are in crisis. As
schemes mature and the population ages, the burden of
financing pensions has grown and, on current policies, will
rise much further. Developing countries are younger and
pension systems relatively immature. But the transformation
in demographics and pension benefits that took over a
century in richer nations is forecast to take less than 30
years in developing economies. The Bank has argued that a
'three-pillar' pension system can mitigate
emerging problems in developing countries' public
pension systems. The recommended system, set out in Averting
the Old Age Crisis consists of 'a publicly managed
system with mandatory participation and the limited goal of
reducing poverty among the old; a privately managed
mandatory savings system; and voluntary savings'. The
note compares funded and pay-as-you-go finance of retirement
incomes, highlighting the transition double burden, and,
stipulates size of the transition will depend on the
starting point: How generous is the current pay-as-you-go
pension promise? How mature is the pay-as-you-go pension
system? What is the age structure of the population?
Transition costs can be controlled by a number of policies:
Limiting the coverage of the funded program to new
labor-market entrants or younger workers spreads the
transition cost over a longer period; Scaling down existing
pay-as-you-go liabilities is likely to play an important
part in any fundamental pension reform; Governments can
share in any extra returns to the funded system and use them
to help pay for the transition cost. Countries have in
practice used a mix of strategies. The precise balance
between debt and budgetary finance (spending cuts or tax
increases) should be chosen in the general context of a
country's fiscal policy. |
| format |
Publications & Research :: Brief |
| author |
World Bank |
| author_facet |
World Bank |
| author_sort |
World Bank |
| title |
Transition : Paying for a Shift from Pay-as-You-Go Financing to Funded Pensions |
| title_short |
Transition : Paying for a Shift from Pay-as-You-Go Financing to Funded Pensions |
| title_full |
Transition : Paying for a Shift from Pay-as-You-Go Financing to Funded Pensions |
| title_fullStr |
Transition : Paying for a Shift from Pay-as-You-Go Financing to Funded Pensions |
| title_full_unstemmed |
Transition : Paying for a Shift from Pay-as-You-Go Financing to Funded Pensions |
| title_sort |
transition : paying for a shift from pay-as-you-go financing to funded pensions |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2005/01/6266699/transition-paying-shift-pay-as-you-go-financing-funded-pensions http://hdl.handle.net/10986/11242 |
| _version_ |
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