Building Voluntary Pension Schemes in Emerging Economies
After the financial crisis, some Central and Eastern Europe countries partially or totally reversed the pension reforms they had initiated in the previous two decades. In the presence of an aging population in the region, reductions in replacement...
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World Bank, Washington, DC
2016
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| Online Access: | http://documents.worldbank.org/curated/en/2016/08/26628945/building-voluntary-pension-schemes-emerging-economies http://hdl.handle.net/10986/24860 |
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okr-10986-248602021-04-23T14:04:27Z Building Voluntary Pension Schemes in Emerging Economies Rudolph, Heinz P. pensions contributory pensions pension funds behavioral defaults investment incentives After the financial crisis, some Central and Eastern Europe countries partially or totally reversed the pension reforms they had initiated in the previous two decades. In the presence of an aging population in the region, reductions in replacement rates will be the most likely adjustment mechanism for the social security systems to remain fiscally sustainable. In some other emerging economies, mandatory funded schemes are operating with low contribution rates, and policy makers have not been able to pass legislation to increase the contribution rate to ensure adequate pensions for future retirees. Voluntary pension schemes that take into consideration the behavioral aspects of individuals may provide a viable solution for countries that need to increase retirement savings but face political resistance to mandatory increases in contribution rates. The proposed mechanism shifts the focus of voluntary pension plans from "opt-in" to "opt-out" schemes. The emphasis is in setting the default options in a way that employees have to make an explicit decision if they do not want to contribute to the pension system. The paper builds on the experiences of several countries, including Italy, New Zealand, the United Kingdom, and the United States, and proposes policy recommendations and good practices for building voluntary pension systems. These opt-out schemes should be able to provide high coverage among white and blue collar workers, and consequently improve the future pensions of individuals. 2016-08-10T14:48:22Z 2016-08-10T14:48:22Z 2016-08 Working Paper http://documents.worldbank.org/curated/en/2016/08/26628945/building-voluntary-pension-schemes-emerging-economies http://hdl.handle.net/10986/24860 English en_US Policy Research Working Paper;No. 7779 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Europe and Central Asia Eastern Europe Europe Italy New Zealand United Kingdom United States |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
pensions contributory pensions pension funds behavioral defaults investment incentives |
| spellingShingle |
pensions contributory pensions pension funds behavioral defaults investment incentives Rudolph, Heinz P. Building Voluntary Pension Schemes in Emerging Economies |
| geographic_facet |
Europe and Central Asia Eastern Europe Europe Italy New Zealand United Kingdom United States |
| relation |
Policy Research Working Paper;No. 7779 |
| description |
After the financial crisis, some Central
and Eastern Europe countries partially or totally reversed
the pension reforms they had initiated in the previous two
decades. In the presence of an aging population in the
region, reductions in replacement rates will be the most
likely adjustment mechanism for the social security systems
to remain fiscally sustainable. In some other emerging
economies, mandatory funded schemes are operating with low
contribution rates, and policy makers have not been able to
pass legislation to increase the contribution rate to ensure
adequate pensions for future retirees. Voluntary pension
schemes that take into consideration the behavioral aspects
of individuals may provide a viable solution for countries
that need to increase retirement savings but face political
resistance to mandatory increases in contribution rates. The
proposed mechanism shifts the focus of voluntary pension
plans from "opt-in" to "opt-out"
schemes. The emphasis is in setting the default options in a
way that employees have to make an explicit decision if they
do not want to contribute to the pension system. The paper
builds on the experiences of several countries, including
Italy, New Zealand, the United Kingdom, and the United
States, and proposes policy recommendations and good
practices for building voluntary pension systems. These
opt-out schemes should be able to provide high coverage
among white and blue collar workers, and consequently
improve the future pensions of individuals. |
| format |
Working Paper |
| author |
Rudolph, Heinz P. |
| author_facet |
Rudolph, Heinz P. |
| author_sort |
Rudolph, Heinz P. |
| title |
Building Voluntary Pension Schemes in Emerging Economies |
| title_short |
Building Voluntary Pension Schemes in Emerging Economies |
| title_full |
Building Voluntary Pension Schemes in Emerging Economies |
| title_fullStr |
Building Voluntary Pension Schemes in Emerging Economies |
| title_full_unstemmed |
Building Voluntary Pension Schemes in Emerging Economies |
| title_sort |
building voluntary pension schemes in emerging economies |
| publisher |
World Bank, Washington, DC |
| publishDate |
2016 |
| url |
http://documents.worldbank.org/curated/en/2016/08/26628945/building-voluntary-pension-schemes-emerging-economies http://hdl.handle.net/10986/24860 |
| _version_ |
1764457844047872000 |