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All countries in the former transition economies of Central, Eastern, and Southern Europe have undertaken public pension reforms of varying depth and orientation, often with the support of the World Bank. Although the reformed public pension schemes provide broad benefit adequacy, in most cases additional measures are needed to achieve fiscal sustainability in an aging society. 'Adequacy of Retirement Income after Pension Reforms in Central, Eastern, and Southern Europe: Eight Country Studies' assesses the benefit adequacy of the reformed pension systems for eight countries—Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania, the Slovak Republic, and Slovenia—to identify policy gaps and options. The authors identify the motivations for reform against the backdrop of the trend toward multi-pillar arrangements, document key provisions, and compare them in the context of the World Bank's five-pillar paradigm for pension reform. They then evaluate the sustainability and adequacy of reformed pension systems and provide recommendations to address gaps and take advantage of opportunities for further reforms. The case studies and summary suggest the following broad policy conclusions: • Fiscal sustainability has improved in most study countries, but few are fully prepared for the inevitability of population aging. • The linkage between contributions and benefits has been strengthened, and pension system designs are better suited to market conditions • Levels of income replacement are generally adequate for all but some categories of workers (including those with intermittent formal sector employment or low lifetime wages), and addressing their needs requires initiatives that go beyond pension policy. • Further reforms should focus on extending labor force participation by the elderly to avoid benefit cuts that could undermine adequacy and very high contribution rates that could discourage formal sector employment. • More decisive financial market reforms are needed for funded provisions to deliver on the expectations of participants and keep funded pensions safe. This book will be of interest to policy makers, researchers, and everyone interested in the topic of pensions in the region, and beyond.

Pension schemes all over the world are under increasing pressure to efficiently hedge longevity risk imposed by ageing populations. In this work, we study an optimal investment problem for a defined contribution pension scheme that decides to hedge longevity risk using a mortality-linked security, typically a longevity bond. The pension scheme promises a minimum guarantee which allows the members to purchase lifetime annuities upon retirement. The scheme manager invests in the risky and riskless assets available on the market, including the longevity bond. We transform the corresponding constrained optimal investment problem into a single investment portfolio optimization problem by replicating future contributions from members and the minimum guarantee provided by the scheme. We solve the resulting optimization problem using the dynamic programming principle. Through a series of numerical studies, we show that the longevity risk has an important impact on the investment strategy performance. Our results add to the growing evidence supporting the use of mortality-linked securities for efficient hedging of longevity risk.

Australia's Higher Education Contribution Scheme (HECS) is an income contingent loan scheme, in which university students pay back part of the costs of their tuition after their post-university income reaches a certain threshold, is an important policy innovation for the financing of higher education. However, its critics claim that HECS increases socioeconomic inequalities in higher education and the HECS debt reduces the ability of young people to make the transitions to adulthood. This paper investigates these claims. There is no evidence that socioeconomic inequalities in higher education in Australia increased after the implementation of HECS in 1989 or the 1997 reforms. The magnitude of the HECS debt was found to have a negative impact on the transition to parenthood, but had no negative impacts on other transitions to adulthood: leaving the parental home, marriage and home ownership. Its effects on parenthood were moderate compared to other influences, such as full-time work in the previous year, marriage and being in a de facto relationship. Furthermore, only a small proportion of young people who attended university have large enough HECS debts for it to affect their fertility decisions. (HRK / Abstract übernommen).

We experimentally test different rule-based contribution mechanisms in a repeated 4 -player public goods game with endowment heterogeneity and compare them to a VCM , distinguishing between a random and an effort-based allocation of endowments. We find that endowment heterogeneities limit the efficiency gains from these rule-based contribution schemes under random allocation. Under effort-based allocations, substantial efficiency gains relative to a VCM occur. These are largely driven by significant reductions of contributions in VCM , while the rule-based mechanisms generate stable efficiency levels, even though falling short in realizing the maximal efficiency gains. Our results indicate that the procedure of endowment allocation impacts the perception of what constitutes a fair burden sharing.

This article presents estimates of the private monetary benefits in Australia associated with the completion of Bachelor degrees for a range of fields of study under a range of different assumptions. For the average person, results show strong monetary incentives to complete these degrees and the private rate of return compares favourably with the real long-term bond rate. However, differences can be observed in rates of return according to gender and discipline of study with, generally, lower returns for women and for those holding degrees in the humanities. The results are calculated on varying assumptions which provide evidence of the robustness of the conclusions. Finally, implications for policy, such as university financing and increases in university places, are discussed.

We consider accumulative defined contribution pension schemes with a lump sum payment on retirement. These schemes differ in relation to inheritance and provide various decrement factors. For each scheme, we construct the balance equation and obtain an expression for calculation of gross premium. Payments are made at the end of the insurance event period (survival to retirement age or death or retirement for disability within the accumulation interval). A simulation model was developed to analyze the constructed schemes.

This paper examines how pay-as-you-go (PAYG) pension reform from a defined-benefit scheme to a defined-contribution scheme affects economic growth in an overlapping-generations model with endogenous growth. We show that in economies in which the old-age dependency ratio is high and the size of pension benefits under a defined-benefit scheme is large, such a pension reform mitigates the negative growth effect of population aging caused by a decline in the population growth rate or an increase in life expectancy.

The National Insurance Scheme (NIS) remains the cornerstone of the Norwegian pension system. The introduction of a mandatory occupational pension in 2006, and the restructuring of the contractual pension (AFP) in 2008, have, however, significantly increased the importance of labor market based pensions. Entitlement to AFP and contributions to occupational pensions are largely determined by individual employers, thus resulting in significant different future pension benefits and opportunities to retire early among employees. This article investigates what characterizes private sector enterprises that offer their employees both entitlement to AFP and a ‘good’ occupational pension, compared with enterprises that only offer a minimum pension. Analyzing data from a survey carried out in 2012 among 1107 private sector companies, I find that companies who offered an occupational pension before such schemes became mandatory in 2006 and companies where the social partners had conducted negotiations concerning pensions, were more likely to offer ‘good’ labor market based pensions. Both of these factors are linked to union strength and strong social partner relations.

The implementation of funded defined contribution pension systems prompted a broad discussion on how to protect pension fund members from the various risks associated with capital markets. Investment risk management is traditionally carried out by investment rules (mainly investment restrictions). However, in single portfolio systems that allow pension savings in just one fund or a single portfolio for all members without making a distinction as to age, these rules are not adequate to prevent the timing risk, namely a sudden fall in the value of accumulated savings immediately before retirement. Consequently, new methods of lifecycle portfolio modelling have been developed. These new investment strategies are based on the age of retirement. Therefore, in this paper the authors analyze the different modalities of lifecycle portfolio modelling from the theoretical and comparative perspective. Two main model strategies have been highlighted: the model of funds of different risk levels (so-called lifestyle funds) and the model of target date funds (so-called lifecycle funds). Knowledge about and understanding of these strategies is important for the successful implementation of the three pillar pension system in Croatia, where two pillars are funded defined contribution systems.