Equity Analysis for Pensions (Social Insurance)

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Equity Analysis for Pensions (Social Insurance)
Public Expenditure Analysis and Manage Core
Course
Presented by Anita M. Schwarz ECSHD
March 21-24, 2005
Presented to
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Equity Analysis for Pensions (Social Insurance)

• Anita M. Schwarz
• ECSHD
• March 2005

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Pensions Based on Contributions

• Coverage limited to those who pay benefits based
  on level and duration of contributions
• Less than 50 of the labor force is paying
  contributions likelihood of paying goes up with
  income
• Unsurprisingly, expenditures go to higher income
  groups

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Important Redistributions Nonetheless

• Redistribution from those outside the system to
  those within when there are fiscal deficits
• Redistribution across generations younger
  cohorts pay more with aging of the population
• Redistribution within covered cohort
• Progressive benefit formula
• Minimum pension

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Fiscal Sustainability
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Fiscal Sustainability

• Someone has to pay the future pensioners
• Either paid from outside the system
• Partial default due to rules change
• Redistribution from outside the system to within
• Intergenerational equity

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Equity within a Cohort
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Sometimes Need to Look Beyond Pension System for
Intracohort Equity

• Sometimes means-tested pension benefits available
  in addition to contributory
• Sometimes basic benefits available to all
• Sometime pensioners eligible for same social
  assistance as other age groups