Pension Reform

Abstract

The previous decade has been one of pension reform throughout the world. In high income countries, the driving force has been the threat that current systems will become unaffordable in coming decades, with demographic developments presenting a major risk. In another setting, countries in the process of transition from a command, to a market economy are confronted with the challenge of introducing a public pension system that will provide social security in old age, but that also supports the fundamentals of a market economy. In the latter sense, it is important to examine carefully the experiences of developed market economies. Even in these countries, the driving force behind reform is demographic change and affordability. In a third setting, middle and lower-middle income countries are faced with the question of what system will best serve the interests of their specific country goals for the future. In all of these settings "NDC"-non-financial defined contribution-pension schemes have been on the agenda in discussions of possible options. Sweden is one of the few countries to have implemented an NDC scheme in the 1990s, when NDC came into its own as a concept, implemented in four European Union (EU) countries (Italy, Latvia, and Poland are the other three). NDC has become a reform option considered by many countries, understandably since most of Europe has a pay-as-you-go tradition, and NDC constitutes a new way to "organize" a mandatory, universal pay-as-you-go pension system. With some experience of NDC schemes implemented, it is felt particularly relevant for Sweden to host a conference devoted to discussing both the conceptual and institutional aspects of NDC. The goal was even more ambitious, however: to contribute to creating a synthesis of current knowledge on this new topic. This book is the realization of that goal. It comprises discussion papers on the status of NDC, its concept and the reform strategies that follow. Papers also discuss the conceptual issues of design and implementation , lessons from countries with NDC contribution schemes, and finalizes on the potential of NDC contribution schemes in other countries' reforms.

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