Holzmann, Robert

Person:
Holzmann, Robert

Fields of Specialization

Public Finance, Pension Strategy

Last updated February 1, 2023

Biography

Robert Holzmann is elected fellow of Austrian Academy of Sciences and as of September 2019 governor of the Austrian Central Bank. He held academic positions in Austria, Australia, Germany and Malaysia, senior economist positions at OECD and IMF, and senior management positions at the World Bank where he was leading the pension strategy work. He has published 37 books and some 200 articles on financial, fiscal and social policy issues. He has travelled to over 90 countries in the world.

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Now showing 1 - 10 of 34

China's Pension System : A Vision

(Washington, DC: World Bank, 2013-02-27) Dorfman, Mark C. ; Holzmann, Robert ; O'Keefe, Philip ; Wang, Dewen ; Sin, Yvonne ; Hinz, Richard

China is at a critical juncture in its economic transition. A comprehensive reform of its pension and social security systems is an essential element of a strategy aimed toward achieving a harmonious society and sustainable development. Among policy makers, a widely held view is that the approach to pension provision and reform efforts piloted over the last 10-15 years is insufficient to enable China's economy and population to realize its development objectives in the years ahead. This volume suggests a national pension system that no longer distinguishes along urban and rural locational or hukou lines yet takes account of the diverse nature of employment relations and capacity of individuals to make contributions. This volume is organized as follows: the main text outlines this vision, focusing on summarizing the key features of a proposed long-term pension system. It first examines key trends motivating the need for reform then outlines the proposed three-pillar design and the rationale behind the design choices. It then moves on to examine financing options. The text continues by discussing institutional reform issues, and the final section concludes. The six appendixes provide additional analytical detail supporting the findings in the main text. The pension system design can play an important role in supporting or constraining such economic and demographic transitions: 1) fragmentation and lack of portability of rights hinder labor market efficiency and contribute to coverage gaps; 2) multiple schemes for salaried workers, civil servants, and, in some areas, migrants similarly impact labor markets; 3) legacy costs that are largely financed through current pension contributions weaken incentives for compliance and accurate wage reporting; 4) very limited risk pooling and interurban resource transfers limit the insurance function of the urban pension system and create spatial disparities in old-age income protection; 5) low retirement ages affect incentives and benefits and undermine fiscal sustainability; and 6) relatively low returns on individual accounts result in replacement rates significantly less than anticipated while at the macro level, are likely to inhibit wider efforts to stimulate higher domestic consumption.
Global Pension Systems and Their Reform : Worldwide Drivers, Trends, and Challenges

(World Bank, Washington, DC, 2012-05) Holzmann, Robert

Across the world, pension systems and their reforms are in a constant state of flux driven by shifting objectives, moving reform needs, and a changing enabling environment. The ongoing worldwide financial crisis and the adjustment to an uncertain 'new normal' will make future pension systems different from past ones. The objectives of this policy review paper are threefold: (i) to briefly review recent and ongoing key changes that are triggering reforms; (ii) to outline the main reform trends across pension pillars; and (iii) to identify a few areas on which the pension reform community will need to focus to make a difference. The latter includes: creating solutions after the marginalization or, perhaps, demise of Bismarckian systems in countries with high rates of informality; keeping the elderly in the labor market; and addressing the uncertainty of longevity increases in pension schemes.
New Ideas about Old Age Security : Toward Sustainable Pension Systems in the 21st Century

(Washington, DC: World Bank, 2001) Holzmann, Robert ; Stiglitz, Joseph E. ; Holzmann, Robert ; Stiglitz, Joseph E.

Given the impact of the multipillar approach to pension reform and the diversity of its implementation, the authors, who presented papers at the 1999 conference on "New Ideas About Old Age Security," re-examine the evidence and thinking on pensions and retirement security. This report examines global issues on pension reform which help put in perspective three major sets of questions. A first set of questions deals with generic issues that concern policymakers worldwide, almost independently of apporaches to reform. Most prominent but also least understood are the economic policy questions regarding the economic circumstances that are most conducive to the initiation of a reform and to its eventual success. Equally important are questions relating to the coverage of the labor force under a reformed system. Other questions concern the distributive effects of reformed systems with respect to generation, income group, and gender. A second set of questions is linked with a move toward funded provisions under a multipillar approach. A third set of questions concerns the multipillar reform approach itself. A wide consensus has emerged inside and outside the World Bank about the multipillar framework, but that consensus does not extend to several key issues regarding how the framework should be implemented in practice. The introduction to this report sums up each chapter in the report and concludes with a discussion of policy issues and on areas requiring further research.
Financial Capability in Low- and Middle-Income Countries : Measurement and Evaluation

(World Bank, Washington, DC, 2013-06) Holzmann, Robert ; Mulaj, Florentina ; Perotti, Valeria

This report provides an overview of the conceptual foundations and work program implemented by the World Bank under the Russia Financial Literacy and Education Trust Fund (RTF) generously supported by the Ministry of Finance of the Russian Federation beginning in October 2008. The overall objective of the Trust Fund was to support implementation of the December 2006 summit statement from the Russian G8 Presidency, which greatly advanced the topic of financial literacy and education within the international policy discussion. The specific objective of the overall effort was to extend the knowledge base to help Low-Income Country's (LICs) and Middle-Income Country's (MICs) prepare and implement national strategies and programs in this area. This report positions the results of the RTF work program undertaken by the World Bank within the broader realm of international knowledge activities. It highlights the contributions of this work program to the conceptual development and measurement of financial capability and the evaluation of the results achieved by programs directed towards its enhancement. The elements of the work program led by the World Bank focused on two measurement-related topics: 1) how to measure financial capability in a way that is applicable to diverse levels of economic development and across individuals of different income levels; and 2) how to measure the effectiveness of interventions to improve financial capability including, but extending well beyond, formal financial education programs.
Pension Reform in Europe : Process and Progress

(Washington, DC: World Bank, 2003) Holzmann, Robert ; Orenstein, Mitchell ; Rutkowski, Michal ; Holzmann, Robert ; Orenstein, Mitchell ; Rutkowski, Michal

Pension reform is an important topic, high on the agendas of most European countries, where countries are profoundly affected by an aging population, the result of lower fertility, and increased life expectancy, changes in family structure, and the effects of globalization. The book presents seven papers on the political economy of European pension reform, where clearly, major reforms are needed, to ensure the sustainability of retirement income systems. However, reform programs will need to combine measures to delay retirement; introduce changes in the benefit structure; and, diversify the sources of retirement income, to better balance individuals' risks. Subjects address the need to accelerate the European pension reform agenda, and compares the making of pension privatization in Latin America with that in Eastern Europe. Furthermore, subjects look at democracy and structural pension reform in continental Europe, focusing on the aging population, the electoral behavior, and early retirement impacts, on the basis of commitment, and consensus - or the lack thereof - to pension reform. Most interestingly, one of the subjects questions, and further analyzes, the wide differences of social policy models among transition economies, to finalize with a look at the diffusion of pension innovation. These subjects provide insight into the process, and progress of European pension reform, to the benefit of the reform agenda in other regions as well.
Matching Contributions for Pensions : A Review of International Experience

(Washington, DC: World Bank, 2013) Hinz, Richard ; Holzmann, Robert ; Tuesta, David ; Takayama, Noriyuki ; Hinz, Richard ; Holzmann, Robert ; Tuesta, David ; Takayama, Noriyuki

Establishing robust, equitable, and effective social protection is essential to reducing poverty and boosting prosperity at all levels of development. The demographic transition that has already transformed most high-income societies will exert similar and growing pressures on others, reinforcing the role of pensions and savings for old age as a central pillar of social protection systems. One possible solution that has emerged in recent years that offers the potential to overcome this challenge is the provision of contribution matches to provide an immediate and powerful incentive for participation in pension saving systems. Originating in several high-income settings there are now a number of innovations and substantial experience in low-income countries in using this design to stimulate coverage and savings. This experience now provides a rich opportunity for learning, not just from the longer experience of a few high-income countries but also the more meaningful South-South learning across developing countries.This volume, which reviews the experience with matching pension contributions across the range of countries that have used the design, makes an initial, but critically important investment in this learning process. The description and analysis of this experience which is the product of partnership and collaboration across many public and private institutions provide an invaluable early assessment of the design to inform policy makers and practitioners as well as serve as a model for the kind of cooperation that will be required to address this difficult challenge. At the World Bank, we look forward to being part of this learning process of how to best provide old-age security for all.
Nonfinancial Defined Contribution Pension Schemes in a Changing Pension World : Volume 1. Progress, Lessons, and Implementation

(Washington, DC: World Bank, 2012) Holzmann, Robert ; Palmer, Edward ; Robalino, David

Pensions and social insurance programs are an integral part of any social protection system. Their dual objectives are to prevent a sharp decline in income and protect against poverty resulting from old age, disability, or death. The critical role of pensions for protection, prevention, and promotion was reiterated and expanded in the new World Bank 2012-2022 social protection strategy. This new strategy reviews the success and challenges of the past decade or more, during which time the World Bank became a main player in the area of pensions. But more importantly, the strategy takes the three key objectives for pensions under the World Bank's conceptual framework coverage, adequacy, and sustainability and asks how these objectives and the inevitable difficult balance between them can best be achieved. The ongoing focus on closing the coverage gap with social pensions and the new outreach to explore the role of matching contributions to address coverage and/or adequacy is part of this strategy. This comprehensive anthology on nonfinancial defined contribution (NDC) pension schemes is part and parcel of the effort to explore and document the working of this new system or reform option and its ability to balance these three key objectives. This innovative, unfunded individual accounts scheme provides a promising option at a time when the world seems locked into a stalemate between piecemeal reform of ailing traditional defined benefit plans or their replacement with prefunded financial account schemes. The current financial crisis, with its focus on sovereign debt, has enhanced the attraction of NDC as a pension scheme that aims for intra and intergenerational fairness, offers a transparent framework to distribute economic and demographic risks, and, if well designed, promises long-term financial stability. Supplemented with a basic minimum pension guarantee, explicit noncontributory rights, and a funded pillar, the NDC approach provides an efficient framework for addressing poverty and risk diversification concerns.
Nonfinancial Defined Contribution Pension Schemes in a Changing Pension World : Volume 2. Gender, Politics, and Financial Stability

(Washington, DC: World Bank, 2013) Holzmann, Robert ; Palmer, Edward ; Robalino, David ; Holzmann, Robert ; Palmer, Palmer ; Robalino, David

The concept of nonfinancial (notional) defined contribution (NDC) was born in the early 1990s and implemented from the mid-1990s in a number of countries. This innovative unfunded individual account scheme emerged and created high hopes at a time when the world seemed to have been locked into a stalemate between making piecemeal reforms of ailing traditional pay- as-you-go defined benefit schemes and introducing prefunded financial account schemes. Nonfinancial (notional) defined contribution (NDC) plans are designed to eliminate the work disincentives and nontransparent redistributions of defined benefit (DB) social security schemes without the transition costs and risk shifting that occurs in the context of a switch to a funded defined contribution (DC) scheme. To a large extent, they sweep away the special privileges that, intentionally or inadvertently, accrue to various groups in traditional schemes and pay everyone in accordance with his or her own contributions. However, not surprisingly, these new provisions will have different effects on diverse population subgroups, including men and women. Most of the effects do not stem from explicit gender-specific provisions in the plans, but rather from the interaction of gender-free policies with differing demographic and employment characteristics of men and women. The same policies affect the two genders differently because of the more limited labor force attachment of women as a result of their childbearing and childrearing roles, their lower earnings when they do work, their longer life expectancy, and the likelihood that they will eventually become widows and live alone in very old age. Both financial defined contribution (FDC) and NDC plans make certain design choices explicit that are implicit in DB plans. Although this feature allows for more informed decision making, it can also be politically sensitive and divisive. In some cases, the decision process is simpler for NDC plans than for FDC plans. NDC plans do not have individual investments and, therefore, do not have the problems that FDCs face and that stem from decentralized investment decisions.
Demographic Alternatives for Aging Industrial Countries : Increased Total Fertility Rate, Labor Force Participation, or Immigration

(World Bank, Washington, DC, 2005-12) Holzmann, Robert

The paper investigates the demographic alternatives for dealing with the projected population aging and low or negative growth of the population and labor force in the North. Without further immigration, the total labor force in Europe and Russia, the high-income countries of East Asia and the Pacific, China, and, to a lesser extent, North America is projected to be reduced by 29 million by 2025 and by 244 million by 2050. In contrast, the labor force in the South is projected to add some 1.55 billion, predominantly in South and Central Asia and in Sub-Saharan Africa. The demographic policy scenarios to deal with the projected shrinking of the labor forth in the North include moving the total fertility rate back to replacement levels, increasing labor force participation of the existing population through a variety of measures, and filling the demographic gaps through enhanced immigration. The estimations indicate that each of these policy scenarios may partially or even fully compensate for the projected labor force gap by 2050. But a review of the policy measures to make these demographic scenarios happen also suggests that governments may not be able to initiate or accommodate the required change.
Old-Age Financial Protection in Malaysia : Challenges and Pptions

(World Bank Group, Washington, DC, 2014-11) Holzmann, Robert

This policy paper presents key findings and suggestions on Malaysia s old-age financial protection system within the context of the country s broader social security framework. The trademark policy approach focusing on job creation instead of expanding social security programs served the country well to move it quickly to a high-middle income level. But to join the club of high-income countries in a sustainable manner may require the country to review its approach to social security, including the way old-age income support is provided, and to address the main current weaknesses: fragmentation across economic sectors, lack of an enabling political environment, incomplete benefit coverage, low mandated savings level, and inadequate disbursement options given the challenges of projected population aging and socioeconomic shifts. To address the old-age financial protection challenge, the paper outlines two key options for Malaysia's employees provident fund, the country's central pension pillar: (i) moving from a mere retirement savings investment fund to a fully-fledged pension fund that offers some minimum annuities; or (ii) more radically, moving the benefits toward a non-financial defined contribution scheme with the fund s resources used as its major reserve fund. Whatever approach is considered, the reform discourse will benefit from changes in the overall governance structure of social security and from a comprehensive research agenda that offers an evidence based decision making.