Informality And The Challenge Of Pension Adequacy Outlook And Reform Options For Peru
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| Author | : Christoph Freudenberg |
| Publisher | : International Monetary Fund |
| Total Pages | : 47 |
| Release | : 2019-07-11 |
| Genre | : Business & Economics |
| ISBN | : 1498326420 |
Past reforms have put the Peruvian pension system on a largely fiscally sustainable path, but the system faces important challenges in providing adequate pension levels for a large share of the population. Using administrative microdata at the affiliate level, we project replacement rates in the defined benefit (DB) and defined contribution (DC) pillars over the next 30 years and simulate the impact of various reform scenarios on the average level and distribution of pensions. In the DB pillar, the regressive minimum contribution period should be re-thought, while in the DC pillar a broadening of the contribution base and/or an increase in contribution rates would help increase replacement rates relative to the baseline forecast of 25-33 percent. A higher net real rate of return than assumed in the baseline would also have a significant positive impact. In the medium-term, labor market reform to tackle informality, and a broad pension reform to restructure the system and avoid competition between the DB and DC pillars should be a priority. Given low pension coverage, having a strong non-contributory pillar will remain important for the foreseeable future.
| Author | : Dirk Hofäcker |
| Publisher | : Edward Elgar Publishing |
| Total Pages | : 193 |
| Release | : 2023-03-02 |
| Genre | : Business & Economics |
| ISBN | : 1802208585 |
This timely and perceptive book addresses the issues surrounding the adequacy of old-age income for future pensioners worldwide. It highlights how today’s young people are confronted with the simultaneous challenges of increasing employment uncertainty and declining pension generosity – topics which are highly relevant in contemporary welfare states.
| Author | : International Monetary Fund. Western Hemisphere Dept. |
| Publisher | : International Monetary Fund |
| Total Pages | : 94 |
| Release | : 2021-03-24 |
| Genre | : Business & Economics |
| ISBN | : 1513574809 |
Peru entered the pandemic with a sustained track record of implementing very strong policies amid very strong economic fundamentals and institutional policy frameworks, but was hit hard by the pandemic, which took a heavy toll in terms of human lives and economic output. Tensions between executive and legislative powers continue to affect institutional cohesion, but new general elections will be held in April-June 2021. The IMF Executive Board approved a two-year FCL arrangement in the amount of US$11 billion (600 percent of quota) on May 28, 2020.
| Author | : International Monetary |
| Publisher | : International Monetary Fund |
| Total Pages | : 93 |
| Release | : 2022-05-11 |
| Genre | : Business & Economics |
| ISBN | : |
After being hit very hard by the pandemic in 2020, both in terms of health and economic outcomes, Peru experienced an equally strong economic rebound in 2021. A new administration was inaugurated in July 2021 with a program focused on reducing inequality and improving social conditions, but limited support from Congress and lack of cohesion heightened political uncertainty. While real GDP surpassed its pre-pandemic level by 2021, labor force participation and total employment have not fully recovered yet. Poverty increased significantly in 2020 and, despite some improvement in 2021, remains higher than in 2019. On May 27, 2021, the IMF Executive Board completed the mid-term review of Peru’s continued qualification under the Flexible Credit Line (FCL) arrangement.
| Author | : Samuel Pienknagura |
| Publisher | : International Monetary Fund |
| Total Pages | : 52 |
| Release | : 2021-09-10 |
| Genre | : Business & Economics |
| ISBN | : 151359611X |
Chile’s pension system came under close scrutiny in recent years. This paper takes stock of the adequacy of the system and highlights its challenges. Chile’s defined contribution system was quite influential when introduced, and was taken as an example by other countries. However, it is now delivering low replacement rates relative to OECD peers, as its parameters did not adapt over time to changing demographics and global returns, while informality persists in the labor market. In the absence of reforms, the system’s inability to deliver adequate outcomes for a large share of participants will continue to magnify, as demographic trends and low global interest rates will continue to reduce replacement rates. In addition, recent legislation allowing for pension savings withdrawals to counter the effects from the COVID-19 pandemic, is projected to further reduce replacement rates and increase fiscal costs. A substantial improvement in replacement rates is feasible, via a reform that raises contribution rates and the retirement age, coupled with policies that increases workers’ contribution density.
| Author | : Mr. Ravi Balakrishnan |
| Publisher | : International Monetary Fund |
| Total Pages | : 123 |
| Release | : 2021-04-26 |
| Genre | : Business & Economics |
| ISBN | : 1484326091 |
Over the past decades, inequality has risen not just in advanced economies but also in many emerging market and developing economies, becoming one of the key global policy challenges. And throughout the 20th century, Latin America was associated with some of the world’s highest levels of inequality. Yet something interesting happened in the first decade and a half of the 21st century. Latin America was the only region in the World to have experienced significant declines in inequality in that period. Poverty also fell in Latin America, although this was replicated in other regions, and Latin America started from a relatively low base. Starting around 2014, however, and even before the COVID-19 pandemic hit, poverty and inequality gains had already slowed in Latin America and, in some cases, gone into reverse. And the COVID-19 shock, which is still playing out, is likely to dramatically worsen short-term poverty and inequality dynamics. Against this background, this departmental paper investigates the link between commodity prices, and poverty and inequality developments in Latin America.
| Author | : Mr. Alvar Kangur |
| Publisher | : International Monetary Fund |
| Total Pages | : 26 |
| Release | : 2021-07-16 |
| Genre | : Business & Economics |
| ISBN | : 1513588842 |
The Greek pension system has been costly, complex, and distortive, which has contributed to Greece’s fiscal problems and discouraged labor force participation. Several attempts to reform the system faltered due to lack of implementation, pushback by vested interests, and court rulings leading to reversals. A series of reforms introduced throughout 2015–17 unified benefit and contribution rules, removed several distortions and reduced fragmentation and costs. If fully implemented throughout the long-term, these reforms can go a long way towards enhancing the pension system affordability. However, reforms faced setbacks and fell short of creating stronger incentives to build long contribution histories, to deliver sustainable growth by improving the fiscal policy mix, and to ensure fairness and equitable burden sharing across generations and interest groups. Policy priorities should aim towards fully implementing the 2015–17 reforms and complementing them with additional reforms to address these remaining objectives.
| Author | : Franziska Ohnsorge |
| Publisher | : World Bank Publications |
| Total Pages | : 397 |
| Release | : 2022-02-09 |
| Genre | : Business & Economics |
| ISBN | : 1464817545 |
A large percentage of workers and firms operate in the informal economy, outside the line of sight of governments in emerging market and developing economies. This may hold back the recovery in these economies from the deep recessions caused by the COVID-19 pandemic--unless governments adopt a broad set of policies to address the challenges of widespread informality. This study is the first comprehensive analysis of the extent of informality and its implications for a durable economic recovery and for long-term development. It finds that pervasive informality is associated with significantly weaker economic outcomes--including lower government resources to combat recessions, lower per capita incomes, greater poverty, less financial development, and weaker investment and productivity.
| Author | : Mr.Marc Gerard |
| Publisher | : International Monetary Fund |
| Total Pages | : 30 |
| Release | : 2019-01-25 |
| Genre | : Business & Economics |
| ISBN | : 1484396499 |
The Netherlands has been operating fully funded, defined benefit second pillar pension schemes that have consistently ranked high worldwide for delivering high replacement rates while featuring strong solidarity among members. Yet the long-term sustainability of the Dutch pension funds has been undermined in recent years by protracted low interest rates and unfavorable demographic developments, exacerbating controversies over intergenerational transfer mechanisms within the plans. This has prompted a national debate over ways to move toward more individualization while preserving financial security at retirement for all. This paper draws on this experience, illustrated by stress testing simulations and assessed vis-à-vis solutions implemented in peer countries, to discuss the main policy trade-offs associated with the reform of mature pension systems in advanced economies.
| Author | : Robert Holzmann |
| Publisher | : World Bank Publications |
| Total Pages | : 246 |
| Release | : 2005-01-01 |
| Genre | : Business & Economics |
| ISBN | : 082136040X |
The past decade has brought an increasing recognition to the importance of pension systems to the economic stability of nations and the security of their aging populations. This report attempts to explain current policy thinking and update the World Bank's perspective on pension reform. This book incorporates lessons learned from recent Bank experiences and research that have significantly increased knowledge and insight regarding how best to proceed in the future. The book has a comprehensive introduction and two main parts. Part I presents the conceptual underpinnings for the Bank's thinking on pension systems and reforms, including structure of Bank lending in this area. Part II highlights key design and implementation issues where it signals areas of confidence and areas for further research and experience, and includes a section on regional reform experiences, including Latin American and Europe and Central Asia.
