Publication: The Gender Impact of Pension Reform
Date
2012-01
ISSN
Published
2012-01
Author(s)
James, Estelle
Cox Edwards, Alejandra
Wong, Rebeca
Abstract
During the past two decades, new
multi-pillar systems have developed to make the plans more
financially sustainable and beneficial for economic growth.
These systems have been sweeping Latin America, the
transition economies of Eastern and Central Europe and the
former Soviet Union, as well as many OECD countries. The
new systems contain two separate mandatory
"pillars" or financing arrangements: a
privately-managed defined contribution (DC) funded plan that
handles workers' retirement saving and a
publicly-managed defined benefit (DB) plan that is reduced
in size compared with the old one and has the objective of
redistributing and diversifying retirement income. In the
defined contribution plan, the contribution is specified and
placed in the worker's individual account but benefits
are uncertain a priori--they depend strictly on
contributions plus investment earnings that accumulate
through the workers' lifetime. The fact that these
accounts are funded, owned by workers, invested in financial
markets, and don't carry a promise of a large
tax-financed old age benefit relieves the government of a
future financial obligation. However, critics argue that
these plans will produce lower pensions for women, who have
worked and contributed less than men. In contrast,
supporters argue that the new systems remove biases in the
old systems that favored men and discouraged work by women.
They hypothesize that separating the redistributive function
from the earnings-related saving function results in more
transparent and targeted redistributions from which women
will benefit.
Citation
“James, Estelle; Cox Edwards, Alejandra; Wong, Rebeca. 2012. The Gender Impact of Pension Reform. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/13046?show=full License: CC BY 3.0 IGO.”