Publication:
Transition : Paying for a Shift from Pay-as-You-Go Financing to Funded Pensions

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dc.contributor.authorWorld Bank
dc.date.accessioned2012-08-13T14:32:36Z
dc.date.available2012-08-13T14:32:36Z
dc.date.issued2005-01
dc.description.abstractThere is a widespread perception that public pension systems in richer countries are in crisis. As schemes mature and the population ages, the burden of financing pensions has grown and, on current policies, will rise much further. Developing countries are younger and pension systems relatively immature. But the transformation in demographics and pension benefits that took over a century in richer nations is forecast to take less than 30 years in developing economies. The Bank has argued that a 'three-pillar' pension system can mitigate emerging problems in developing countries' public pension systems. The recommended system, set out in Averting the Old Age Crisis consists of 'a publicly managed system with mandatory participation and the limited goal of reducing poverty among the old; a privately managed mandatory savings system; and voluntary savings'. The note compares funded and pay-as-you-go finance of retirement incomes, highlighting the transition double burden, and, stipulates size of the transition will depend on the starting point: How generous is the current pay-as-you-go pension promise? How mature is the pay-as-you-go pension system? What is the age structure of the population? Transition costs can be controlled by a number of policies: Limiting the coverage of the funded program to new labor-market entrants or younger workers spreads the transition cost over a longer period; Scaling down existing pay-as-you-go liabilities is likely to play an important part in any fundamental pension reform; Governments can share in any extra returns to the funded system and use them to help pay for the transition cost. Countries have in practice used a mix of strategies. The precise balance between debt and budgetary finance (spending cuts or tax increases) should be chosen in the general context of a country's fiscal policy.en
dc.identifierhttp://documents.worldbank.org/curated/en/2005/01/6266699/transition-paying-shift-pay-as-you-go-financing-funded-pensions
dc.identifier.doi10.1596/11242
dc.identifier.urihttps://hdl.handle.net/10986/11242
dc.languageEnglish
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesWorld Bank Pension Reform Primer Series
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCOUNTING
dc.subjectADMINISTRATIVE COSTS
dc.subjectADVERSE SELECTION
dc.subjectASSET SALES
dc.subjectBALANCE SHEET
dc.subjectBENEFIT LEVEL
dc.subjectBORROWING
dc.subjectCONTRIBUTION RATE
dc.subjectCONTRIBUTION RATES
dc.subjectDEBT FINANCING
dc.subjectDEFICIT FINANCING
dc.subjectDEFICITS
dc.subjectFINANCIAL MARKETS
dc.subjectFINANCIAL SECTOR
dc.subjectFISCAL POLICIES
dc.subjectFISCAL POLICY
dc.subjectFISCAL RETRENCHMENT
dc.subjectFUNDED ACCOUNTS
dc.subjectFUNDED COMPONENT
dc.subjectFUNDED PENSION SYSTEMS
dc.subjectFUNDED PENSIONS
dc.subjectFUNDED SCHEMES
dc.subjectFUNDED SYSTEMS
dc.subjectGDP
dc.subjectGOVERNMENT ASSETS
dc.subjectGOVERNMENT BONDS
dc.subjectGOVERNMENT BUDGET
dc.subjectGOVERNMENT DEBT
dc.subjectGOVERNMENT GUARANTEES
dc.subjectGROSS DOMESTIC PRODUCT
dc.subjectINDEXATION
dc.subjectINDIVIDUAL ACCOUNTS
dc.subjectINSURANCE
dc.subjectINTEREST RATE
dc.subjectINVESTMENT RETURNS
dc.subjectLABOR MARKETS
dc.subjectMANDATORY SAVINGS
dc.subjectPENSION COSTS
dc.subjectPENSION DEBT
dc.subjectPENSION FUND
dc.subjectPENSION FUND MANAGEMENT
dc.subjectPENSION FUND MANAGERS
dc.subjectPENSION FUNDS
dc.subjectPENSION LIABILITIES
dc.subjectPENSION PLAN
dc.subjectPENSION REFORM
dc.subjectPENSION REFORMS
dc.subjectPENSION RESERVES
dc.subjectPENSION RIGHTS
dc.subjectPENSION SYSTEM
dc.subjectPENSION SYSTEMS
dc.subjectPENSIONERS
dc.subjectPERSONAL PENSIONS
dc.subjectPRIVATE PROPERTY
dc.subjectPRIVATIZATION
dc.subjectPUBLIC SECTOR
dc.subjectPUBLIC SECTOR DEBT
dc.subjectPUBLIC SPENDING
dc.subjectREPLACEMENT RATE
dc.subjectRETIREES
dc.subjectRETIREMENT
dc.subjectRETIREMENT AGE
dc.subjectRETIREMENT BENEFITS
dc.subjectSAVINGS RATES
dc.subjectSOCIAL PROTECTION
dc.subjectSOCIAL SECURITY
dc.subjectTAX
dc.subjectTAX RATES
dc.subjectTAXATION
dc.subjectTREASURY
dc.subjectVALUATION
dc.subjectWAGE GROWTH
dc.titleTransition : Paying for a Shift from Pay-as-You-Go Financing to Funded Pensionsen
dspace.entity.typePublication
okr.date.doiregistration2025-04-29T10:15:24.369017Z
okr.doctypePublications & Research::Brief
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2005/01/6266699/transition-paying-shift-pay-as-you-go-financing-funded-pensions
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeSocial Protection and Labor
okr.globalpracticeFinance and Markets
okr.globalpracticeGovernance
okr.guid964361468340745524
okr.identifier.externaldocumentum000012009_20050902105208
okr.identifier.internaldocumentum6266699
okr.identifier.report33390
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2005/09/02/000012009_20050902105208/Rendered/PDF/333900rev0PRPNoteTransition.pdfen
okr.topicPublic Sector Economics
okr.topicPensions and Retirement Systems
okr.topicBanks and Banking Reform
okr.topicMacroeconomics and Economic Growth::Economic Stabilization
okr.topicEconomic Theory and Research
okr.topicFinance and Financial Sector Development
okr.topicSocial Protections and Labor
okr.topicPublic Sector Development
okr.unitSocial Protection Team (HDNSP)
okr.volume1 of 1
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