66111 December 2011 – Number 50 Pension Reform Implementation Support Technical Assistance (PRISTA): Institution Building in Iraq – The PRISTA Model 1 Ghassan Alkhoja, Zaina Dawani Introduction: The Pension Reform Implementation Iraq. This note provides a brief outline of the Support Technical Assistance (PRISTA) is a World objectives of PRISTA and how PRISTA is structured Bank-executed US$5.8 million grant to the to provide sustainable institution building in the Government of Iraq (GOI), which was formally context of Iraq. launched in February 2010. PRISTA responds to GOIs request for assistance to support pension Objectives reforms in Iraq and the implementation of the In the Short term In the Medium term In the Long term Unified Pension Law, and to bring international Support GOI in Support the experience in supporting such reforms. Efforts to implementing the Support the development of Unification of the reform Iraq‟s pension system started soon after provisions of the public and private long-term old-age Unified Pension income strategy April 2003, which culminated in the passing of Law Law pension schemes for Iraq 27/2006 in January 2006, subsequently amended in December 2007 (and referred to as the Unified Components Pension Law). Component 5 Component 1 Component 4 Facilitate the Develop Support the development The Unified Law entailed reforms that aim to capacity to implement the unification of the of long term national old- modernize the public pension scheme and improve new pension mandatory age income law pension financial sustainability through redesigning the provisions in protection strategy for financing scheme that was originally funded from Component 2 Support the Iraq Iraq general budget to become a defined benefit scheme development of actuarial with pay-as-you-go financing. In addition, the Law and pension included provisions on the merger of public and policy analysis capacity for private pension schemes which stipulated the SPF establishing the National Board of Pensions (NBP) Component 3 as the unifying body of the mandatory pension Contribute to the schemes. While the new Law presents a significant improvement of the physical improvement of the pension system in Iraq, there infrastructure of the NBP are substantial challenges in terms of GOIs capacity the SPF to implement the law, and to ensure a comprehensive, affordable, equitable, and Institutional Development: The PRISTA approach sustainable old-age income protection mechanism in is to provide comprehensive support to the NBP in implementing reforms in the pension system. Given 1 The authors work in the World Bank‟s Middle East and North the complex and challenging nature of these Africa Region‟s Human Development Group (MNSHD). This reforms, all aspects of the NBP have to be addressed Quick Note was cleared by MNSHD Social Protection Sector to lead to an effective organization capable of Manager Roberta Gatti. meeting these challenges. Therefore, PRISTA is areas such as pensions administration, actuarial addressing institution building in a “whole analysis, ICT, investment management, organization� manner, focusing on the following communications, and others; and (ii) Policy: during levels of development: (i) Institutional Development; the process of developing policies, counterparts are (ii) Organizational Functions; and (iii) Individual presented with policy options based on international Capacity. best practices, and workshops are organized to discuss options, analyze scenarios, select preferred options, and contextualize solutions. The project Institutional Organizational Individual utilizes various learning methods including Systems Functions Capacity structured local and international training, workshops, on-site learning, international The Development of Institutional and Governance conferences, and international learning visits. Systems: PRISTA supports the development of the institutional system for the newly established State Implementation Features – Focus on Local Pension Fund (SPF), comprising of the business Implementation: PRISTA is increasingly focusing operations model, organizational structure, and on implementing activities locally. Two full-time governance system, as well as the governance project coordinators are based in Baghdad from the system for the SPF Board of Administrators. The outset which allowed for continuous on-the-ground next stage of institutional systems development engagement in implementation and management of focuses on the administration of the SPF services: activities. Implementation support is mostly done Contribution Management System (CMS), Pension locally, and most technical training is now being Administration ICT System, and Human Resources. implemented inside Iraq, while the development of the CMS is also being done inside Iraq. Institutional Organizational Individual Policy Options Approach: When developing high- Systems Functions Capacity level policies/systems within the framework of the project, a „policy options‟ approach is followed The Development of Key Functions Within the SPF: where PRISTA only presents options based on PRISTA also entails the building of key functions international best practice and experience and within the SPF, both short and long term ones. It convenes the Iraqi counterparts to review and entails developing relevant regulations, guidelines, discuss these options. Regular workshops gathering strategies, and action plans for immediate experts from the Iraqi and the World Bank sides are application in the areas of public communications, organized to discuss different policy options, physical infrastructure, investment management analyze scenarios based on international experience and actuarial analysis, and also working on long- and local conditions, select preferred option, and term pension policies focusing on fiscal contextualize implementation solutions. This sustainability, merger of pension schemes and approach is providing high levels of ownership for improving old-age income in Iraq. This work cuts policies selected and significant knowledge transfer. across all five components of PRISTA. Knowledge Creation in Arabic: PRISTA is the first Institutional Organizational Individual pension project in the region that is creating Systems Functions Capacity knowledge using the local language. PRISTA is producing all documents: pension policies, regulations, guidelines, technical summaries, Building Staff Capacity: PRISTA involves strategies, presentations etc, in both Arabic and substantial capacity development activities, whether English, creating the first pensions repository in direct (specific) or indirect (during the Arabic that can be utilized to serve many other implementation process). Learning and knowledge countries in the region. transfer have been key in driving pension reform forward. These are addressed at two levels: (i) Introduction of Innovative Approaches: Large scale Technical: targeting activities that are specifically change and reform can be overwhelming and organized to build the capacity of staff in technical requires creative and innovative approaches beyond December 2011 · Number 50 · 2 the conventional ways; therefore PRISTA introduced the Rapid Results Approach (RRA) to its Institution Development through a ‘whole’ Organization Individual Capacity implementation modality. The RRA uses specially Approach structured short-term (100-day) initiatives to make large change more effective, sustainable, and Organizational Functions quicker. Each 100-day initiative is built around the achievement of an ambitious. RR proved to have significant impact on improving service delivery Institutional Systems and more importantly on changing the conventional way of doing things and the overall organizational culture within the institution. Results include reducing time to pay arrears payment from two months to one day, and significantly improving Supporting the development Supporting the development of Significant capacity building work processes in the NBP. of key functions institutional and governance and a high level of ownership systems Transferring Substantial International Experience: •Board Governance System Technical: Targeted Capacity PRISTA brings substantial international experience Short-term •Management Structure Building to the dialogue on pension reform in Iraq, •Investment Management •HR System •ICT Systems •Communications assembling experts with diverse experiences, •Contribution Management •Pension Administration •Actuarial Analysis knowledge and skills to benefit the reform process •Pension Administration •Actuarial Analysis •Physical Infrastructure in Iraq. It also opens up channels for international •Information Technology •Infrastructure •Media & Communications knowledge transfer through learning visits, •Pension Policy conferences, and through membership in Long-term •Investment international associations such as the International •Merger of Pension Schemes Social Security Association, among others. •Pension Policy Development •Old-Age Income Strategy Policy “Options� Approach: •Expansion of Coverage •Discuss policy options •Analyze multiple scenarios •Selectpreferred option •Contextualize implementation All Material Rapid Results Approach Developed in Arabic Rapid Results Approach Contact MNA K&L: Laura Tuck, Director, Strategy and Operations. MENA Region, The World Bank Regional Quick Notes Team: Omer Karasapan, , Roby Fields, and Hafed Al-Ghwell Tel #: (202) 473 8177 The MNA Quick Notes are intended to summarize lessons learned from MNA and other Bank Knowledge and Learning activities. The Notes do not necessarily reflect the views of the World Bank, its board or its member countries. December 2011 · Number 50 · 3