New recommendations on actuarial valuation

The International Actuarial Association issued recently new recommendations on Valuation of Social Security Programs. The goal is to strengthen the coherence of actuarial studies. This should become a mandatory reference for actuarial practice in all countries.

ILO on socially responsible investment

Julien Goy and Helmut Schwarzer, from the ILO, have published this paper on “Socially responsible investment, decent work and pension funds: Concepts and international experiences”.

Social security funds have become significant players in financial markets, and sometimes can hold shares and bonds of private and public corporations that make them eligible to have a voice, seats in the board and sometimes even a controlling interest. To make those investments compatible with the goals of the decent work agenda and the social security views has consequently become part of the goals of fund managers and regulators.

Benefits cut or tax increases?

In the face of financial insolvency, social security schemes have only two options: benefits cut or increase in taxes. In a survey, Americans voted for taxes increases. Read the complete note here.

New social protection program in Antigua & Barbuda

A employment and training program will be launched. The program is consistent with the social protection floor. See the information here

Discussions in Chile to improve the pension system

Read the complete note here

Discussion to reform Uruguay´s pension system

During these weeks there are several discussion to reform the pension system in Uruguay. You can read the note here

Retirement around entitlement age

Often social security programs around the world increase the official retirement age aiming at delay retirement and make the system financially sustainable. Nevertheless, even though the age at which workers retire is influenced by the rules of the programs, it is a personal decision. This was the topic studied in the CISS 2012 Report. A new paper that studies the determinants of retirement decisions can be read here.

15 years of the Mexican new pension system

In this link you can access the presentations of the event organized to celebrate 15 years of the new system

New changes to Peruvian Private Pension System

During the last days it was know the result of the auction to assign new accounts to pension fund managers (AFP). The winning bidder will charge 1.60%. More information here.

Life and death expectancies...not the same

Life expectancy is a very common term in debates and research on social security. What do people mean by life expectancy? John Payne from Duque University and his colleagues have performed an experiment, asking individuals the same question, but framed in alternative way. The question can refer to how long an individual expects to live, or to when he or she expects to die. Logically, the answer should be the same, but it is not.

For example, if the question is: "Do you expect to be alive by age 85"?, the answer in more pessimistic than when the question is: "How long do you expect to live?"

You can find the paper here.

The issue is important because it relates to the regulations on mandatory or statutory retirement ages, to the regulation to annuities markets, and to regulations on sales by insurance companies.

Pension reform in Nicaragua

The National Social Security Institute of Nicaragua has issued a proposal to strengthen the pension system. The main initiatives are to increase the rates of contribution, to promote affiliation of  young workers, to increase the cap on maximum taxable wages, to increase the statutory age at retirement to 65, to increase the bonus for extra years of contribution, and to create an option for individual savings managed by the INSS.

Education in social security: the informed work more

The relevance of education in social security is the subject of research in this paper by Jeff Liebman and Enzo Luttmer.They performed an experiment in which a group of workers was informed about basic provisions of the social security system, while another group was not informed. After one year, the informed group was working more than the uninformed group (4%), with the effect being larger for women (7%). The authors believe that the reason is that the informed understand that working more results in a higher pension.

Age discrimination induces earlier retirement

According to research by David Neumark and Joanne Song, reforms to social security to delay retirement ages may be frustrated by age discrimination. Apparently, state-level regulations to prevent age discrimination favored a stronger result in terms of delays in retirement ages after the reforms to the federal pension program of the United States.

Casual description of Korean health insurance

One of the systems considered more successful in achieving universal coverage of health insurance among emerging economies is South Korea. This is a casual although illustrative description.

Gender equality: the child bonus

A challenge for pension systems is to achieve gender equity. It is common that in a couple, the man works while the woman stays at home to have children and care for them. Entitlement to a pension is usually related to work experience. A compensating mechanism is the bonus per child in Chile. This is an amount received by the woman through her individual retirement account and is used to increase the value of her pension; it can not be withdrawn as a lump sum, but can be used to improve the value of a pension after age 65

Family pension in Colombia

The wave of reform to pension systems during the nineties increased the number of periods of contributions required to obtain a pension. In Colombia this parameter is 1,200 weeks. Over time, it has been seen that many individuals do not reach the threshold, and so a new "family pension" is being created. This facility will allow to add the periods of contributions of spouses who do not reach the 1,200 weeks separately, and thus obtain a pension. This solution solves partially a problem faced by individual retirement accounts as they were established in Latin America: a high parameter of periods of contribution results in that many workers have the right to withdraw all their savings at once when they reach the statutory retirement age. This goes against the goal of increasing the coverage of the pension system.

Supplementary pensions in Honduras

The Congress of Honduras debates over new legislation to provide monetary benefits to older adults not covered by social security. This country with very low coverage of social security has only around 50 thousand retirees, but 700 thousand older adults.

Impact of Social Security

In this note a very interesting summary of the work of Kevin Milligan, a specialist in social security.

Growth in the labor participation of older adults

There seems to be a long-term increase in the work of older adults.This article by Casey Mulligan refers to the issue, and to how it has been influenced by the economic crisis. The upcoming 2012 Americas Social Security Report, to be published in a few months, will deal with this issue.

US healthcare reform and Social Security

The discrepancies in the health insurance premium that have to pay one persons with a pension and the other one receiving his full income from his job, but otherwise identical persons, illustrates how complex is the design of insurance markets or programs. See the complete note here.