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Pension systems and reform conceptual framework

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  • Holzmann, Robert
  • Paul, Richard Hinz
  • Dorfman, Mark

Abstract

The WorldBank's conceptual framework to assess pension systems and reform options evaluates initial conditions and the capacity to improve the enabling environment, and then focuses on how best to work within these to achieve the core objectives of pension systems - protection against the risk of poverty in old age and smoothing consumption from one's work life into retirement. The Bank applies a multi-pillared approach towards pension system modalities to address the needs of target populations including: (i) a non-contributory'zero pillar'extending some level of old-age income security to all of the elderly; (ii) an appropriately sized mandatory'first pillar'with the objective of replacing some portion of lifetime pre-retirement income through contributions linked to earnings; (iii) a funded mandatory defined-contribution'second pillar'that typically provides privately-managed individual savings accounts; (iv) a funded voluntary'third-pillar;'and (v) a non-financial'fourth pillar.'The primary evaluation criteria are the ability of the system to maintain adequacy, affordability, sustainability, equity, predictability, and robustness. The secondary evaluation criteria are the system's capacity to: minimize labor market distortions; contribute to savings mobilization; and contribute to financial market development. Because pension benefits are claims against future economic output, it is essential that over time pension systems contribute to growth and output to support the promised benefits. Going forward, the Bank is focusing on strengthening its support in: (a) establishing a clearer results framework to assess pension systems and reforms; (b) enhancing knowledge management, including research and learning; and (c) improving implementation capacity.

Suggested Citation

  • Holzmann, Robert & Paul, Richard Hinz & Dorfman, Mark, 2008. "Pension systems and reform conceptual framework," Social Protection Discussion Papers and Notes 46175, The World Bank.
    • Handle: RePEc:wbk:hdnspu:46175
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    Cited by:

    1. Marhanum Che Mohd Salleh & Mohammad Abdul Matin Chowdhury & Siti Salwani Razali & Nan Nurhidayu Megat Laksana, 2020. "Retirement Schemes, its Challenges and Ways of Reformation: A Cross-Border Study," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 10(9), pages 507-520, September.
    2. Mustafizur Rahman & Towfiqul Islam Khan & Mostafa Amir Sabbih, 2021. "An Estimation of the Implementation Costs and Financing Options for Introducing a Universal Pension Scheme in Bangladesh," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 22(1), pages 110-131, March.
    3. Tesliuc, Cornelia & Silverio Marques, Jose & Mookodi, Lillian & Braithwaite, Jeanine & Sharma, Siddarth & Ntseane, Dolly, 2013. "Botswana social protection," Social Protection Discussion Papers and Notes 89003, The World Bank.
    4. Che-cheong Poon & Tai-Yuen Hon, 2015. "Household Savings in Hong Kong: A Statistical Analysis," Journal of Family and Economic Issues, Springer, vol. 36(3), pages 353-368, September.
    5. Habibah TOLOS & Peijie WANG & Miao ZHANG & Rory SHAND, 2014. "Retirement systems and pension reform: A Malaysian perspective," International Labour Review, International Labour Organization, vol. 153(3), pages 489-502, September.
    6. Peter Waring & Azad Bali & Chris Vas, 2020. "The fourth industrial revolution and labour market regulation in Singapore," The Economic and Labour Relations Review, , vol. 31(3), pages 347-363, September.
    7. Olga Rajevska, 2015. "Sustainability of Pension Systems in the Baltic States," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 3(4), pages 139-153.
    8. Teresa Ghilarducci & Karthik Manickam, 2023. "A Critical Survey of Pension Provision And Pension Reform," SCEPA working paper series. 2023-04, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    9. Gentian Qejvanaj, 2021. "International Organizations Lending Policy, are There Strings Attached? A Case Study From the Latest Wave of Reforms in the Albanian Social Security System," SAGE Open, , vol. 11(3), pages 21582440211, August.

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