Pensions in Palestine : Reform in a Context of Unrest, Volume 1. Main Report
At the request of the Palestinian Authority (PA), the status of pension schemes in the West Bank and Gaza was reviewed, and a technical analysis of the two civil service schemes was undertaken. A Technical Appendix reports in detail on projections...
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| Format: | Policy Note |
| Language: | English en_US |
| Published: |
Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2003/02/2183593/west-bank-gaza-pensions-palestine-reform-context-unrest-vol-1-2-main-report http://hdl.handle.net/10986/14875 |
| Summary: | At the request of the Palestinian
Authority (PA), the status of pension schemes in the West
Bank and Gaza was reviewed, and a technical analysis of the
two civil service schemes was undertaken. A Technical
Appendix reports in detail on projections of the financial
status of the civil service schemes as well as on
improvement options. This paper summarizes the main findings
and highlights the policy implications. Its primary focus is
on solutions that could be implemented in the short-term.
The civil service pension schemes are bankrupt and in need
of reform. The major issues facing them are: financial
non-sustainability; government arrears in contributions;
corporate governance issues resulting in rapid depreciation
of the pension fund; the lack of financial disclosure;
government overstaffing; and the lack of coverage for the
private sector. This report recommends as critical next
steps in the short term that there must be immediate and
significant parametric reforms designed to restore financial
solvency and enhance equity, such as reducing the retirement
age and cutting benefit accrual rates. Governance, that is,
increasing the transparency and efficiency of the Gaza
Pensions and insurance Corporation (GPIC), the largest
non-bank financial institution in the West Bank and Gaza,
has been suggested. Right-sizing government employment is
also important. In the long-term, systemic reforms will be
needed to solidify pensions for government workers.
Comprehensive protection for all elderly persons, one of the
most vulnerable groups, is desperately needed within the
context of the current crisis. A universal flat benefit
scheme is the only short-term option that can provide
broad-based assistance. Another short-term key concept is
the recovery of pension transfers owed to Palestinian
workers from Israel; the value could be significant and
could avert poverty for many soon-to-retire Palestinians
with extensive work histories in Israel. The sequencing and
initiation of pension reform is a lengthy process, involving
the reconciliation of conflicting priorities among different
stakeholders. Within the context of the West Bank and Gaza,
it may be best to think of the reform process in three
steps: commitment building, coalition building, and implementation. |
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