Publication: Toward an Inclusive, Equitable, and Sustainable National Pension System in Iraq
Loading...
Date
2024-07-22
ISSN
Published
2024-07-22
Editor(s)
Abstract
A pension system is at the heart of social protection. By ensuring income security for older persons and other vulnerable groups, it prevents poverty, reduces inequality, and facilitates consumption smoothing. A pension system also affects the working population’s labor market choices and has important fiscal implications. Iraq’s current pension system is highly fragmented, inequitable, and inefficient. First, it fails to provide adequate income protection to most of Iraq’s old‑age population and other vulnerable groups, such as survivors and persons with disabilities. Second, the public sector pension is already putting substantial pressure on the budget and is potentially unsustainable given the projected acceleration of the total pension bill due to recent policy changes. Third, it sets an uneven playing field between the public and private sectors, contributing to the continued expansion of an already‑outsized civil service and holding back much‑needed economic diversification and private sector growth. Thus, a comprehensive pension reform is urgently needed and would align with commitments made by the Government of Iraq through the ratification of ILO Convention No. 102. Based on collaboration between the IMF, ILO, and the World Bank, this paper aims to (1) Provide an assessment of the existing public and private pension system across the four dimensions: fiscal sustainability, labor market implications, coverage, and adequacy of benefits. (2) Develop and propose options to adjust the pension system with a view to improve adequacy of benefits and expand coverage, enhance financial and fiscal sustainability, make the system viable across generations, reduce distortions in the labor market, and align the system with international social security standards and international best practices. (3) Provide a basis to engage key stakeholders—including workers, employers’ organizations, and the civil society - on strategies to achieve a more inclusive system, importantly by including workers in the informal economy, female workers, workers with disabilities, and other disadvantaged groups. The reform proposals presented here provide one possible route to address the most critical shortcomings of the current fragmented system, in line with international standards and good practices. Convergence on the specific reform options and parameters should result from further discussions and dialogue among all relevant stakeholders in Iraq.
Link to Data Set
Citation
“International Monetary Fund (IMF; International Labour Organization (ILO); World Bank. 2024. Toward an Inclusive, Equitable, and Sustainable National Pension System in Iraq. IMF Analytical Note 2024/001. © International Monetary Fund, International Labour Organization, and the World Bank. http://hdl.handle.net/10986/41926 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Republic of Niger : Towards an Integrated and Sustainable Pension System(Washington, DC, 2009-06-30)This report was prepared at the request of the Government of Niger to: (i) provide a comprehensive assessment of the Nigerien pension system, (ii) analyze current reform initiatives and recommend possible refinements and alternatives, and (iii) examine implementation challenges. To this end, the report develops a set of general guidelines to assess reform options in terms the adequacy of benefits, security, financial sustainability, redistribution, incentives, and administrative efficiency. The core of the report is organized in three chapters. After providing a summary of the background (chapter one), chapter two develops the policy framework and updates the assessment of the mandatory pension systems. The assessment looks at the financial situation of the schemes but also discusses other problems that had been previously overlooked in terms of the adequacy of benefits; the type of redistribution; as well as issues related to incentives. Chapter three reviews Government ongoing reform initiatives, summarizes the international experiences that are relevant to Niger, and, presents recommendations to strengthen current policies by outlining the components of a multi-year reform program, and developing a road map towards implementation.Publication Financial Sector Assessment Program - Albania : Developing Private Pensions in Albania(World Bank, Washington, DC, 2014-02)This note sets out options to develop private pensions in Albania. It has been requested by the authorities to help create a more diversified pension system that can deliver improved outcomes for Albania in decades to come. A diversified pension system mixes state and private pensions as well as other sources of retirement income. The analysis, diagnosis, and recommendations use an outcome-based assessment framework. This technical note looks at how the pension system performs relative to 5 key outcomes: efficiency, sustainability, coverage, adequacy, and security. These outcomes depend on the political and economic environment in which a pension system operates, and its overall design including regulatory framework, market structure and conduct, and supervisory approach.Publication Financial Sector Assessment Program Update : Republic of Kazakhstan - Investment Opportunities for Pension Funds(World Bank, Washington, DC, 2004-08)The objective of this note is to put forward policy alternatives that could lead to improved management of pension fund assets in Kazakhstan. This note emphasizes prudence in the management of pension assets, given the social and fiscal importance of the pension sector. It also discusses different investment alternatives and development options for the domestic Kazakhstani capital market. The note aims to be realistic and pragmatic, based on the best professional judgment of the author.1 It is concluded that neither the regulators nor industry participants appear to fully appreciate the risks attached to the practice of focusing on short-term and high yield investments, which exposes pensioners to higher reinvestment and issuer risk. The recommendations are summarized in the last section of this note.Publication New Ideas about Old Age Security : Toward Sustainable Pension Systems in the 21st Century(Washington, DC: World Bank, 2001)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.Publication India : CPSS-IOSCO Recommendations for Securities Settlement Systems and Central Counterparties(World Bank, Washington, DC, 2013-08)The securities and derivatives clearing and settlement systems in India are organized around different types of products, which are (1) government securities, money market instruments and forex instruments; (2) corporate securities and financial derivatives; and (3) commodity derivatives. The scope of this assessment is limited to the clearing and settlement systems for the first two sets of products. The different sets are subject to different legal frameworks, different regulatory arrangements and the clearing and settlement systems are operated by different entities. The different securities and derivatives clearing and settlement systems handle a large number of transactions and are as such of systemic importance. Volumes in the derivatives segments increased strongly during the last years. Given the growth and volumes of the commodity derivatives market it is recommended that a detailed self-assessment by the Forwards Market Commission (FMC) and/or an independent assessment of the commodity derivatives clearing and settlement systems be considered in the immediate future.
Users also downloaded
Showing related downloaded files
Publication The Brazilian Pension System Under an Equity Lens(Washington, DC: World Bank, 2024-05-07)The objective of this note is to provide a comprehensive analysis of the Brazilian pension system through an equity lens. This focus is important, because fairness and equity of the pension system are relevant even beyond their intrinsic societal value: they are also instrumental for economic growth, as it impacts the incentives to participate in the labor market, as well as the productivity of current and future workers. Furthermore, political considerations also require that fairness and equity are taken into account in any future pension reform discussions. Section 2 provides general overview of the pension system and briefly explains the recent pension reforms in Brazil, while Section 3 offers a framework for addressing equity issues in the pension context. It explores how Brazilian pension system provides different levels of protection to distinct groups, creating a mismatch between contributions paid and benefits received, not always in a progressive manner. Section 4 concludes with a summary of the findings and a set of policy recommendations.Publication Supporting Youth at Risk(World Bank, Washington, DC, 2008)The World Bank has produced this policy Toolkit in response to a growing demand from our government clients and partners for advice on how to create and implement effective policies for at-risk youth. The author has highlighted 22 policies (six core policies, nine promising policies, and seven general policies) that have been effective in addressing the following five key risk areas for young people around the world: (i) youth unemployment, underemployment, and lack of formal sector employment; (ii) early school leaving; (iii) risky sexual behavior leading to early childbearing and HIV/AIDS; (iv) crime and violence; and (v) substance abuse. The objective of this Toolkit is to serve as a practical guide for policy makers in middle-income countries as well as professionals working within the area of youth development on how to develop and implement an effective policy portfolio to foster healthy and positive youth development.Publication Policies to Promote Saving for Retirement : A Synthetic Overview(World Bank, Washington, D.C., 2002-03)The author argues that public and private pillars are essential for a well-functioning pension system. Public pillars, funded or unfounded, offer basic benefits that are independent of the performance of financial markets. Since financial markets suffer from prolonged, persistent, and large deviations from long-term trends, they cannot be relied on as the sole provider of pension benefits. Funded pillars provide benefits that are based on long-term capital accumulation and financial market performance. But they need to be privately managed to minimize dependence on public sector institutions and avoid government dominance of the economy and financial markets. The author focuses mainly on the promotion, structure, and regulation of funded pillars. He discusses the case for using compulsion and tax incentives, for exempting some categories of workers such as the very young (under 25), the very old (over the normal retirement age), the very poor (those earning less than 40 percent of the average wage), and the self-employed, and for offering a credit transfer to be added to individual capitalization accounts to encourage participation by lower-income groups. A robust regulatory framework with a panoply of prudential and protective rules covering "fit and proper" tests, asset diversification and market valuation rules, legal segregation of assets and safe external custody, independent financial audits and actuarial reviews, and adequate disclosure and transparency would be essential. An effective, proactive, well-funded, and properly staffed supervision agency would be necessary. Tight investment rules could initially be justified for countries with weak capital markets and limited tradition of private pension provision. But in the long run, adoption of the "prudent expert" approach with publication of "statements of investment policy objectives" (SIPOs) would be preferable and more efficient. Various guarantees covering aspects such as minimum pension levels and relative investment returns need to be provided to protect workers from aberrant asset managers and insolvency of annuity providers, but care must be taken to address effectively the risk of moral hazard. The author also argues for greater individual choice, including the creation of a dual regulatory structure. One part would involve heavy regulation with constrained choice of investment funds, limits on operating fees and on account switching, and strong government safeguards and guarantees. This would cater to those workers with low risk tolerance. The other part would be more liberal but based on strong conduct rules. It would offer greater choice of investment funds, allowing multiple accounts and liberal account switching, impose no limits on operating fees, and providing no or fewer state guarantees. This would cater to workers seeking a higher return and who are willing to tolerate a higher level of risk.Publication Trade Effects of the New Silk Road(World Bank, Washington, DC, 2019-01)This paper takes a first look at the trade effects of China's Belt and Road Initiative, also referred to as the New Silk Road, on the 71 countries potentially involved. The initiative consists of several infrastructure investment projects to improve the land and maritime transportation in the Belt and Road Initiative region. The analysis first uses geo-referenced data and geographical information system analysis to compute the bilateral time to trade before and after the Belt and Road Initiative. Then, it estimates the effect of improvement in bilateral time to trade on bilateral export values and trade patterns, using a gravity model and a comparative advantage model. Finally, the analysis combines the estimates from the regression analysis with the results of the geographical information system analysis to quantify the potential trade effects of the Belt and Road Initiative. The paper finds that (i) the Belt and Road Initiative increases trade flows among participating countries by up to 4.1 percent; (ii) these effects would be three times as large on average if trade reforms complemented the upgrading in transport infrastructure; and (iii) products that use time sensitive inputs and countries that are highly exposed to the new infrastructure and integrated in global value chains have larger trade gains.Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.