Nicaragua : Pension Reform Proposal

The study reviews the current social security system, and its characteristics, analyzing the shortcomings of the Old Age, Disability and Survivor's Insurance (IVM) system, based on a defined benefit Pay-as-you-go (PAYG) scheme, no longer viabl...

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Main Author:	World Bank
Language:	English
Published:	2013
Subjects:	PENSION REFORM SOCIAL SECURITY SYSTEMS PAY-AS-YOU-GO SYSTEMS TAX EVASION FINANCIAL LOSS FINANCIAL MANAGEMENT INFLATION LABOR MARKETS INVESTMENT RETURNS INDIVIDUAL RETIREMENT ACCOUNTS REGULATORY FRAMEWORK ADMINISTRATIVE ARRANGEMENTS SOCIAL COSTS INVESTMENTS PENSION INSURANCE PENSION VALUATION SOCIAL ASSISTANCE PROGRAMS CONTRIBUTIONS PUBLIC AWARENESS ADMINISTRATIVE COSTS ADVERSE SELECTION AFFILIATES BANKING SECTOR BANKING SUPERVISION BANKRUPTCY BENEFIT FORMULA BENEFIT RATE BIDDING PROCESS CAPITAL MARKETS CAPITAL REQUIREMENTS CAPITALIZATION COMMERCIAL BANKS COMPETITIVE BIDDING CONTRIBUTION BASE CONTRIBUTION RATE CONTRIBUTION RATES CONTRIBUTION RECORDS DEBT DEFICITS DEFINED BENEFITS DEMOGRAPHIC TRANSITION DEPENDENCY RATIO DEPOSIT INSURANCE DISABILITY EXCHANGE RATE EXPENDITURES EXTERNAL AUDITORS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL STABILITY FISCAL YEAR FOREIGN EXCHANGE FRAUD HEALTH CARE HUMAN DEVELOPMENT INCOME INCOME GROUPS INDEXATION INFORMAL SECTOR INSURANCE COMPANIES INSURANCE INDUSTRY INSURANCE MARKETS INSURANCE PREMIUMS INTEREST RATES INVESTMENT RETURN LABOR FORCE LEGISLATION LIFE INSURANCE MANDATORY SYSTEM MARKET DISTORTIONS MATERNITY LEAVE MINIMUM BENEFIT MINIMUM WAGES MORAL HAZARD NEW ENTRANTS NORMAL RETIREMENT AGE OLD AGE INSURANCE PAYROLL TAX PENALTIES PENSION AGENCY PENSION COVERAGE PENSION FUND PENSION FUND MANAGEMENT PENSION FUND MANAGERS PENSION LIABILITIES PENSION PLAN PENSION RIGHTS PENSION SYSTEM PENSION SYSTEMS PENSIONERS PENSIONS PRESENT VALUE PRIVATE BANKS PRIVATE PENSION PRODUCTIVITY PROGRAMS REPLACEMENT RATE REPLACEMENT RATES RESERVES RETIREES RETIREMENT RETIREMENT AGE SAVINGS SOCIAL ASSISTANCE SOCIAL INSURANCE SOCIAL SECURITY SOCIAL SECURITY PROGRAMS SOCIAL SECURITY SYSTEM SOLVENCY STRUCTURAL ADJUSTMENT SURVIVORS INSURANCE SUSTAINABILITY TAX RATES VICTIMS WAGES WORKERS COMPENSATION
Online Access:	http://documents.worldbank.org/curated/en/2000/04/728790/nicaragua-pension-reform-proposal http://hdl.handle.net/10986/14972

id	okr-10986-14972
recordtype	oai_dc
spelling	okr-10986-149722021-04-23T14:03:16Z Nicaragua : Pension Reform Proposal World Bank PENSION REFORM SOCIAL SECURITY SYSTEMS PAY-AS-YOU-GO SYSTEMS TAX EVASION FINANCIAL LOSS FINANCIAL MANAGEMENT INFLATION LABOR MARKETS INVESTMENT RETURNS INDIVIDUAL RETIREMENT ACCOUNTS REGULATORY FRAMEWORK ADMINISTRATIVE ARRANGEMENTS SOCIAL COSTS INVESTMENTS PENSION INSURANCE PENSION VALUATION SOCIAL ASSISTANCE PROGRAMS CONTRIBUTIONS PUBLIC AWARENESS ADMINISTRATIVE COSTS ADVERSE SELECTION AFFILIATES BANKING SECTOR BANKING SUPERVISION BANKRUPTCY BENEFIT FORMULA BENEFIT RATE BIDDING PROCESS CAPITAL MARKETS CAPITAL REQUIREMENTS CAPITALIZATION COMMERCIAL BANKS COMPETITIVE BIDDING CONTRIBUTION BASE CONTRIBUTION RATE CONTRIBUTION RATES CONTRIBUTION RECORDS DEBT DEFICITS DEFINED BENEFITS DEMOGRAPHIC TRANSITION DEPENDENCY RATIO DEPOSIT INSURANCE DISABILITY EXCHANGE RATE EXPENDITURES EXTERNAL AUDITORS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL STABILITY FISCAL YEAR FOREIGN EXCHANGE FRAUD HEALTH CARE HUMAN DEVELOPMENT INCOME INCOME GROUPS INDEXATION INFLATION INFORMAL SECTOR INSURANCE COMPANIES INSURANCE INDUSTRY INSURANCE MARKETS INSURANCE PREMIUMS INTEREST RATES INVESTMENT RETURN INVESTMENT RETURNS LABOR FORCE LEGISLATION LIFE INSURANCE MANDATORY SYSTEM MARKET DISTORTIONS MATERNITY LEAVE MINIMUM BENEFIT MINIMUM WAGES MORAL HAZARD NEW ENTRANTS NORMAL RETIREMENT AGE OLD AGE INSURANCE PAYROLL TAX PENALTIES PENSION AGENCY PENSION COVERAGE PENSION FUND PENSION FUND MANAGEMENT PENSION FUND MANAGERS PENSION LIABILITIES PENSION PLAN PENSION REFORM PENSION RIGHTS PENSION SYSTEM PENSION SYSTEMS PENSIONERS PENSIONS PRESENT VALUE PRIVATE BANKS PRIVATE PENSION PRODUCTIVITY PROGRAMS REGULATORY FRAMEWORK REPLACEMENT RATE REPLACEMENT RATES RESERVES RETIREES RETIREMENT RETIREMENT AGE SAVINGS SOCIAL ASSISTANCE SOCIAL INSURANCE SOCIAL SECURITY SOCIAL SECURITY PROGRAMS SOCIAL SECURITY SYSTEM SOLVENCY STRUCTURAL ADJUSTMENT SURVIVORS INSURANCE SUSTAINABILITY TAX RATES VICTIMS WAGES WORKERS COMPENSATION The study reviews the current social security system, and its characteristics, analyzing the shortcomings of the Old Age, Disability and Survivor's Insurance (IVM) system, based on a defined benefit Pay-as-you-go (PAYG) scheme, no longer viable, given its low payroll taxes, overly generous benefits, and high rates of evasion, all systemic problems, which combined with institutional, and administrative weaknesses of the Instituto Nicaraguense de Seguridad Social (INSS), caused a cash deficit since 1997, and depletion of its reserves for the immediate future. The report explores long term finances, and the rationale for undertaking a systemic reform with mandatory, and defined contributions, based on individual capitalization accounts. It recommends closing the current PAYG system to new entrants, with the proviso for those aged 45-50, to opt for the new system, granting recognition for their acquired rights. General revenues, payroll taxes, and pension fund reserves, or other possible sources, should finance the transition to the new scheme, to be administered by pension fund managers. Funds should be invested both domestically, and abroad, ensuring diversification of the portfolio, as well as protection from local economic, and political manipulation. 2013-08-09T20:07:52Z 2013-08-09T20:07:52Z 2000-04-03 http://documents.worldbank.org/curated/en/2000/04/728790/nicaragua-pension-reform-proposal http://hdl.handle.net/10986/14972 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Latin America & Caribbean Latin America & Caribbean Nicaragua
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	PENSION REFORM SOCIAL SECURITY SYSTEMS PAY-AS-YOU-GO SYSTEMS TAX EVASION FINANCIAL LOSS FINANCIAL MANAGEMENT INFLATION LABOR MARKETS INVESTMENT RETURNS INDIVIDUAL RETIREMENT ACCOUNTS REGULATORY FRAMEWORK ADMINISTRATIVE ARRANGEMENTS SOCIAL COSTS INVESTMENTS PENSION INSURANCE PENSION VALUATION SOCIAL ASSISTANCE PROGRAMS CONTRIBUTIONS PUBLIC AWARENESS ADMINISTRATIVE COSTS ADVERSE SELECTION AFFILIATES BANKING SECTOR BANKING SUPERVISION BANKRUPTCY BENEFIT FORMULA BENEFIT RATE BIDDING PROCESS CAPITAL MARKETS CAPITAL REQUIREMENTS CAPITALIZATION COMMERCIAL BANKS COMPETITIVE BIDDING CONTRIBUTION BASE CONTRIBUTION RATE CONTRIBUTION RATES CONTRIBUTION RECORDS DEBT DEFICITS DEFINED BENEFITS DEMOGRAPHIC TRANSITION DEPENDENCY RATIO DEPOSIT INSURANCE DISABILITY EXCHANGE RATE EXPENDITURES EXTERNAL AUDITORS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL STABILITY FISCAL YEAR FOREIGN EXCHANGE FRAUD HEALTH CARE HUMAN DEVELOPMENT INCOME INCOME GROUPS INDEXATION INFLATION INFORMAL SECTOR INSURANCE COMPANIES INSURANCE INDUSTRY INSURANCE MARKETS INSURANCE PREMIUMS INTEREST RATES INVESTMENT RETURN INVESTMENT RETURNS LABOR FORCE LEGISLATION LIFE INSURANCE MANDATORY SYSTEM MARKET DISTORTIONS MATERNITY LEAVE MINIMUM BENEFIT MINIMUM WAGES MORAL HAZARD NEW ENTRANTS NORMAL RETIREMENT AGE OLD AGE INSURANCE PAYROLL TAX PENALTIES PENSION AGENCY PENSION COVERAGE PENSION FUND PENSION FUND MANAGEMENT PENSION FUND MANAGERS PENSION LIABILITIES PENSION PLAN PENSION REFORM PENSION RIGHTS PENSION SYSTEM PENSION SYSTEMS PENSIONERS PENSIONS PRESENT VALUE PRIVATE BANKS PRIVATE PENSION PRODUCTIVITY PROGRAMS REGULATORY FRAMEWORK REPLACEMENT RATE REPLACEMENT RATES RESERVES RETIREES RETIREMENT RETIREMENT AGE SAVINGS SOCIAL ASSISTANCE SOCIAL INSURANCE SOCIAL SECURITY SOCIAL SECURITY PROGRAMS SOCIAL SECURITY SYSTEM SOLVENCY STRUCTURAL ADJUSTMENT SURVIVORS INSURANCE SUSTAINABILITY TAX RATES VICTIMS WAGES WORKERS COMPENSATION
spellingShingle	PENSION REFORM SOCIAL SECURITY SYSTEMS PAY-AS-YOU-GO SYSTEMS TAX EVASION FINANCIAL LOSS FINANCIAL MANAGEMENT INFLATION LABOR MARKETS INVESTMENT RETURNS INDIVIDUAL RETIREMENT ACCOUNTS REGULATORY FRAMEWORK ADMINISTRATIVE ARRANGEMENTS SOCIAL COSTS INVESTMENTS PENSION INSURANCE PENSION VALUATION SOCIAL ASSISTANCE PROGRAMS CONTRIBUTIONS PUBLIC AWARENESS ADMINISTRATIVE COSTS ADVERSE SELECTION AFFILIATES BANKING SECTOR BANKING SUPERVISION BANKRUPTCY BENEFIT FORMULA BENEFIT RATE BIDDING PROCESS CAPITAL MARKETS CAPITAL REQUIREMENTS CAPITALIZATION COMMERCIAL BANKS COMPETITIVE BIDDING CONTRIBUTION BASE CONTRIBUTION RATE CONTRIBUTION RATES CONTRIBUTION RECORDS DEBT DEFICITS DEFINED BENEFITS DEMOGRAPHIC TRANSITION DEPENDENCY RATIO DEPOSIT INSURANCE DISABILITY EXCHANGE RATE EXPENDITURES EXTERNAL AUDITORS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL STABILITY FISCAL YEAR FOREIGN EXCHANGE FRAUD HEALTH CARE HUMAN DEVELOPMENT INCOME INCOME GROUPS INDEXATION INFLATION INFORMAL SECTOR INSURANCE COMPANIES INSURANCE INDUSTRY INSURANCE MARKETS INSURANCE PREMIUMS INTEREST RATES INVESTMENT RETURN INVESTMENT RETURNS LABOR FORCE LEGISLATION LIFE INSURANCE MANDATORY SYSTEM MARKET DISTORTIONS MATERNITY LEAVE MINIMUM BENEFIT MINIMUM WAGES MORAL HAZARD NEW ENTRANTS NORMAL RETIREMENT AGE OLD AGE INSURANCE PAYROLL TAX PENALTIES PENSION AGENCY PENSION COVERAGE PENSION FUND PENSION FUND MANAGEMENT PENSION FUND MANAGERS PENSION LIABILITIES PENSION PLAN PENSION REFORM PENSION RIGHTS PENSION SYSTEM PENSION SYSTEMS PENSIONERS PENSIONS PRESENT VALUE PRIVATE BANKS PRIVATE PENSION PRODUCTIVITY PROGRAMS REGULATORY FRAMEWORK REPLACEMENT RATE REPLACEMENT RATES RESERVES RETIREES RETIREMENT RETIREMENT AGE SAVINGS SOCIAL ASSISTANCE SOCIAL INSURANCE SOCIAL SECURITY SOCIAL SECURITY PROGRAMS SOCIAL SECURITY SYSTEM SOLVENCY STRUCTURAL ADJUSTMENT SURVIVORS INSURANCE SUSTAINABILITY TAX RATES VICTIMS WAGES WORKERS COMPENSATION World Bank Nicaragua : Pension Reform Proposal
geographic_facet	Latin America & Caribbean Latin America & Caribbean Nicaragua
description	The study reviews the current social security system, and its characteristics, analyzing the shortcomings of the Old Age, Disability and Survivor's Insurance (IVM) system, based on a defined benefit Pay-as-you-go (PAYG) scheme, no longer viable, given its low payroll taxes, overly generous benefits, and high rates of evasion, all systemic problems, which combined with institutional, and administrative weaknesses of the Instituto Nicaraguense de Seguridad Social (INSS), caused a cash deficit since 1997, and depletion of its reserves for the immediate future. The report explores long term finances, and the rationale for undertaking a systemic reform with mandatory, and defined contributions, based on individual capitalization accounts. It recommends closing the current PAYG system to new entrants, with the proviso for those aged 45-50, to opt for the new system, granting recognition for their acquired rights. General revenues, payroll taxes, and pension fund reserves, or other possible sources, should finance the transition to the new scheme, to be administered by pension fund managers. Funds should be invested both domestically, and abroad, ensuring diversification of the portfolio, as well as protection from local economic, and political manipulation.
author	World Bank
author_facet	World Bank
author_sort	World Bank
title	Nicaragua : Pension Reform Proposal
title_short	Nicaragua : Pension Reform Proposal
title_full	Nicaragua : Pension Reform Proposal
title_fullStr	Nicaragua : Pension Reform Proposal
title_full_unstemmed	Nicaragua : Pension Reform Proposal
title_sort	nicaragua : pension reform proposal
publishDate	2013
url	http://documents.worldbank.org/curated/en/2000/04/728790/nicaragua-pension-reform-proposal http://hdl.handle.net/10986/14972
_version_	1764427763715932160

Nicaragua : Pension Reform Proposal

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