attempts to measure the changes in the poverty rates of these countries if a cash transfer program had been introduced. Two national poverty lines (i.e., the food poverty line and basic needs poverty line) and an international poverty line are utilized in the simulations, and poverty rates are measured with the FGT index. The simulated results show that all kinds of cash transfers (i.e., universal old-age and disability pensions, universal child benefits, and targeted cash transfers) would have reduced poverty rates significantly if they had been introduced in these countries. The paper concludes that “intr oducing basic old-age and disability pensions in Senegal and Tanzania would not only improve the living standard of benefit recipients, but also of other members living in the same household, especially children” ( Gassman and Behrendt, 2006, p. 33). The paper also emphasizes that a universal cash transfer scheme, particularly a child benefit, is an effective tool for poverty reduction, but targeted cash transfer schemes provide ambiguous results regarding this purpose. Thus, policy settings need to be carefully considered in different social and economic contexts.
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Abstract-We study the optimal portfolio and strategic life- cycle consumption process in a defined contributory pension plan. The pension plan members (PPMs) contribute flow of cash into the pension funds. These flow of cash are invested into a market structure that is characterized by a risk-free asset (cash account) and a risky asset (stock) by the pension fund administrator (PFA). The risk-free rate is assume to be deterministic. We find an explicit analytical solution to the non-linear partial differential equation (Hamilton Jacobi Bellman equation (HJB)) that arises from our problem. Also, we find that part of the portfolio value is proportional to the ratio of the present value of expected future contributions to the optimal portfolio value at time t. We further observe that the portfolio of the PPM will grow without bound, if the coefficient of the utility function is close to one, provided the expected growth rate of the risky asset is greater than the short term interest rate. We find an interesting result that shows that as the market evolve, part of the portfolio value should be transferred to the cash account overtime in order to offset unforeseen market shocks that may occur in future time. Also, we find that with the use of power utility function, the inflation risks that is associated with the PPM’s contributions is hedged.
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This paper considers the OVMP strategy under inflation protection, expected wealth and its variance for a DC pension scheme. It was assumed that the salary and risky asset are driven by a standard geometric Brownian mo- tion. The growth rate of salary of PPM is assumed to be a linear function of time. In this paper, we focus on study- ing the OVMP strategy under inflation protection for a DC pension scheme. In related literature,  and , studied optimal portfolio strategy based on the non-Gaussian models. They constructed optimal portfolios of variance swaps based on a variance gamma correlated model. The portfolios of the variance swaps are optimized based on the maximization of the distorted expectation given in the index of acceptability.  examined the rationale, nature and financial consequences of two alternative ap-
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A key outcome of this study is the finding that funded pension scheme has a positive and statistically significant impact on the economic growth in Nigeria within the ten years of its introduction. This is in line with theoretical underpinning because it is believed that the operation of funded pension scheme in Nigeria should increase capital adequacy, liquidity in the economy and the volume of market capitalization as traded on the floor of the Nigerian stock exchange. Then if this transmission mechanism is sustained, it would generally lead to an increase in the nation’s economic growth. This position is in line with the findings of other studies in the literature. For instance, the findings of Gunu and Tsado, (2012) revealed that Pension Fund Investments in domestic quoted equities amounted to N240.38 billion (2.36% of total market capitalization) in 2007, 3.17% in 2008, 4.42% in 2009 and 4.53% in 2010, also the value of total Pension Fund Assets stood at N2, 029 billion in 2010, and concluded that CPS has begun to contribute to the increase in growth and development of not only the Nigerian capital market but the economy in general. To corroborate this, Edogbaya (2013) found that Contributory Pension Scheme, under the auspices of Pension Fund Managers contributed immensely to Nigerian Economic Development. While the appraisal of Ozokwere (2008) and Egbe, Awogbemi & Osu (2013) about pension fund administrators in the management of the new contributory pension scheme attested that Portfolio Optimization of Pension Fund Contribution in Nigeria has greatly improved.
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The paper observes that compliance with the provisions of the law has been more in breach than in practice for the MDAs at the Federal and the State tiers. In particular it was discovered that only twelve (12) states had migrated to the contributory pension scheme. This represents 33.3% of the population. This record is abysmal given the huge mess the pension system had been enmeshed before the emergence of the contributory pension. It was also observed that most organisations at Federal, State and private sector tiers did not procure life in- surance covers for workers in accordance with provisions of the law. It was re- vealed that only four (4) states, from among those that have passed the pension law, secured life insurance policies for its workers. It could be argued that part of the reasons for poor compliance records at the Federal and State tiers of the pension market could not be unconnected with the recession that hit the nation, beginning in 2016. This arguably affected the revenue profile of both the national and sub-national governments, given its dependence on oil revenue. As revenue dwindled, salaries were not paid and so contributions to RSAs were not made. Again, employers preferred to remit contributions together with the accrued in- terests, only when compelled to do so. This is a subtle suggestion that interest penalty for default in remitting contribution is not severe enough. Participation by the organised private sector organisations casts a rather more commendable picture as ever increasing number of them were seen to be switching to the con- tributory pension scheme.
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The Contributory Pension Scheme is expected to serve as a succour to improve the life style of pensioners in Nigeria and at same time make surplus funds available in the capital market for investment purposes to grow the economy. However, several operational bottle necks as well as non-conformity by various stakeholders in the economy to the pension act have created a lot of problems which the scheme is currently battling with. Some of the problems include delay in paying retirees, immediate settlement of families of deceased contributors, profitable investment avenues that will increase the contributions of the contributors, inability of the pension funds administrators to compel employers to pay or remit funds to beneficiaries and so on.
I was Assistant Head until last Easter and I stepped down with a view to taking it a little bit easier before I retire. … I was in the old mould of manager rather than the leader type. … One of my colleagues who was running the arts left, and her job was going to be advertised, I thought I was happier doing that … so I thought I’ll step down. I don’t need the pressure any more and my intention is to retire sooner rather than later. … I like working; doing the same things that I enjoyed at the outset, the working with children and seeing them get excited about doing their artwork. … I’ve had bureaucracy coming out of my ears for such a long time. Some of it is essential but a lot of it I think, the business of meeting targets all the time, the pressure from outside. … One of the reasons that I stepped down from senior leadership is that the pressure on leadership is intense. I kept finding little bits and pieces out [about the TPS changes], so in the end I thought well, if that’s the case I can afford to go a bit earlier, I can step down, I can take the last couple of years, take less pressure and still have the benefit of my higher salary to drive the pension. … As soon as it became confirmed I went and saw [the headteacher] and told her what I’d like to do.
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corruption, making the originally promised benefits impossible to deliver. These findings show that political risks in the case of publicly managed funded pension systems are real. Private funded pension schemes, on the other hand, are considered to be less susceptible to political interference. This is one of the main arguments of the World Bank’s pension reform policy (World Bank, 1994). Proponents of private ownership over funded pension systems, including the World Bank, argue that private ownership ensures a higher rate of return on investments, with a reasonable level of investment risk, provided the governments impose strict rules on the types of investment instruments that are appropriate for these funds. Common rules include prohibitions of investments in complex and speculative financial instruments, and investments only in equities that meet certain criteria (being listed on the stock exchange, or stocks of a certain grade, etc.).
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equation 6 above). Since an individual’s deviation from the market return is tucked away in the error term of the estimating equation, the estimated crowding-out effect might be biased if there is a correlation between mandatory pension contributions and the excess return on investments. If more risk-averse individuals are simultaneously more likely to choose an occupation with large mandatory pension contributions and invest in low-risk assets with a corresponding lower average return, there will be a negative correlation between the error term and mandatory pension contributions if returns are primarily positive. Since individual asset levels are time-variant, this will only, to a minor extent, be captured by the individual fixed effect. In order to limit this concern, assets are divided into three groups (the most detailed level possible in the data): bank deposits, stocks and bonds and other assets. A regression is then run controlling for the three groups of assets separately, such that the assumption regarding returns is that the ability to earn results above the market result within each asset class is uncorrelated with other explanatory variables. In addition, different returns/interest rates are allowed for positive and negative bank deposits, and other assets. Table 6 shows the results of the robustness tests. The two sets of estimates from the periods 1998-2001 and 2002-2005 are very similar and also close to the coefficients obtained from the full sample. Likewise, when we control for individual asset composition, the estimates are in line with those obtained in Table 4. Again, the crowding-out effect is qualitatively unchanged. These results lend credibility to our main result, emphasising that the crowding- out is low and rising with age.
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We exploit this sharp cut-off in the pension qualification age to analyse whether the policy change had a causal effect on the retirement rate of 65-year-olds in 2014 using a regression discontinuity design. This is undertaken using data from the Quarterly National Household Survey (QNHS), Ireland’s labour force survey, which is conducted by the Central Statistics Office (CSO). The identification strategy can be explained in a straightforward way. Consider a scenario where we have data in 2014 on two groups of individuals; one group was born on 31 December 1948 and the other on 1 January 1949. Both groups are 65, with one group being only one day older. However, the older group qualifies for the pension at 65 while the younger group does not. Comparing the retirement outcomes of both groups allows us to assess whether the policy change had a causal effect on the retirement rate. In addition to being virtually the same age, there is no reason to suspect that these two groups will be systematically different with respect to other characteristics (both observable and unobservable) that might impact on the retirement decision. Therefore, any difference in retirement outcomes can be attributed to a causal effect of the policy.
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Welfare services for older adults result from the dynamic interplay of supports from the state and - to a lesser extent - familial and voluntary sectors. In addition to community care, which was discussed in the previous section, two key facets of ageing welfare services include informal care and long-term care. As elsewhere, the informal sector in Malta consists of unpaid, or underpaid, family carers (usually women) who in many cases experience high levels of stress and burnout. The government offers a number of services which family carers of frail older persons can apply to. These include the (i) Non-contributory Carer’s Pension and Social Assistance for Carers which provides economic benefits to persons who are caring for older relatives on a full-time basis, (ii) Social Work Unit which provides psy- chological support, guidance, and assistance to informal carers, (iv) training programs concerning the informal car- ing of older persons, (v) Respite Services that temporarily alleviate the burden on carers of older persons that are living within the community, and (vi), domiciliary general nursing services at a highly subsidized rate. There is no doubt that compared to non-carers informal carers of older persons experience higher levels of physical, emotional, and psy- chological strains. One avenue that can be strengthened so that the physical, social and psychological quality of life of informal carers is improved is respite care. Available respite care is temporary, short-term supervisory, personal and nursing care provided to older adults with physical and/or mental impairments. There is thus an urgent need for respite programs that are situated in the older person’s home and in residential/nursing settings. On one hand, in-home respite care takes place in the home in which the older person lives. Depending on the needs of the caregiver, in-home respite care can occur on a regular or occasional basis and can take place during the day or evening hours. Programs may pro- vide personal and instrumental care for older persons, or supervisory services. Caregivers view in-home respite care as highly acceptable because they do not have to take the older adult out of the environment in which he or she is most comfortable. However, even in-home respite care has its own limitations. It can be expensive, particularly if used frequently and for several hours per day. Families may also be reluctant to use in-home respite services because they
In this subsection a contingency fund is introduced into the minimisation function. It is important to highlight that four papers, Godínez-Olivares et al. (2015), Haberman and Zimbidis (2002), Pantelous and Zimbidis (2008), and Gannon, Legros and Touzé (2013), propose parametric reforms in the PAYG pension systems introducing the concept of a liquidity or contingency fund in order to absorb unexpected events that might affect their liquidity. Gannon, Legros and Touzé (2013) define this buffer fund as the inter- temporal budget balance of the pension system that brings promised future expenditures in line with expected future revenues. For example, the interest generated by the buffer fund in Spain covered the shortfall in contributions during 2010 (Vidal-Meliá (2014)).
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basis. The largest retirement annuities market in the world is the United Kingdom (at over 10bn/year of premia) and Cardinale, Findlater and Orszag (2002) found that it was from well functioning market. In particular there are significant capacity problems in the market to the lack of long-term securities to back annuities obligations. There are however several features of the present annuity market which are likely to pose significant problems in the future. The limits of the current state of play can be grouped into two broad categories: excessive regulation and lack of competition. Excessive regulation has created a perception among providers that annuity products are not very profitable. This is primarily because of regulatory requirements to provide high guaranteed benefits to survivors, lack of suitable assets to match liabilities tied to the wage index and prohibition to charge front-load fees. Asset liability mismatch also leads to substantial risks, which may not be fully appreciated by life insurers. Moreover, lack of competition is exacerbated by the presence of a provider backed by the State competing with private life insurers. In the case of insolvency however State-owned life insurance would be bailed out with taxpayers' money, casting doubt on whether the reformed pension system is ultimately a privatized one.
(2) For the purposes of the requirements in sections 71, 72, 74 and 75 of the 1993 Act(b) and in any subordinate legislation made under Chapter 1 of Part 4 of that Act, as they apply in relation to P and the calculation of P’s benefits under the provisions of the Teachers’ Pension Scheme Regulations 2014 specified in paragraph (3), any difference is to be disregarded—
3.4. Pension System Reforms after Economic Crisis Economic crisis and analysis (indicated in the Concept of the reform of state social insurance and pension scheme of 15 June 2010) showed that there are several problems in pension insurance: the current benefit scheme enables the duplication of benefits;the redistributed part of social insurance pensions (the basic pension) has great significance for the pensions level, while the impact of contributions paid by a person is reflected insufficiently. It makes this scheme unattractive;benefits are not linked to the life expectancy; no incentives to continue longer work career; the identification of work incapacity and special needs are insufficiently transparent and controlled; the state social insurance scheme is financially vulnerable and thepension reserve fund not established; the indexation of the pension benefits is not linked to theeconomic and demographic indicators and is under a strong political impact; no long-term strategy for thepension accumulation.
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Belarus currently has a relatively generous pay-as-you-go pension system, but population aging coupled with recent problems with economic growth will soon make it unsustainable. We build a rich overlapping generation model of Belarusian economy, which shows that without reform the Pension Fund will run into persistent and growing deficit, which will reach 9% of GDP by 2055. We also compute the fiscal projections of several parametric pension reforms, including the reform which will start in 2017. To avoid a deficit without reform, pension benefits would have to be substantially reduced. The increase of retirement age to 65 for both genders has a strong positive effect on sustainability of the pension system and keeps the deficit below 2% of GDP.
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future discounted premiums process. We also establish in this section, the dynamics of the values of wealth of the PPM. In Section 4, we present the valuation of PPM’s wealth process. In Section 5, we present the optimization process and portfolio value of a PPM in pension scheme. Section 6, presents the expected wealth for a PPM up to terminal period. Section 7 presents a special case of op- timal portfolio selection problem. Finally, Section 8 con- cludes the paper.
cent) of respondents thought they were ‘not at all likely’ to make use of a waiting period for current employees, and a further third (33 per cent) thought they were ‘not very likely’ to do so (Table 6.11). One in ten (ten per cent) thought they were ‘quite likely’ to adopt a waiting period, while the remaining nine per cent thought that they were ‘very likely’ to do so. Larger firms were more likely to adopt a waiting period, with over a third (36 per cent) of firms with 250 or more employees stating that they were ‘very likely’ to do so. There was little difference in the percentage of employers who thought they would be ‘very likely’ to adopt a waiting period according to whether or not they currently offered a workplace scheme. However, a slightly higher percentage of firms with a workplace scheme said that they were ‘not at all likely’ to delay automatically enrolling any of their employees (55 per cent among firms with a workplace scheme, compared with 46 per cent among firms with no workplace provision). Employers were much more likely to think they would adopt a waiting period for new employees joining the organisation. Almost half (49 per cent) of employers who had not passed their staging date thought they would be ‘very likely’ to adopt such a waiting period for new employees (Table 6.11). Around a further fifth (21 per cent) thought they were ‘quite likely’ to do so. Among employers with no current workplace scheme, almost three- quarters (72 per cent) thought they were either ‘quite likely’ or ‘very likely’ to adopt such a waiting period, compared with around three-fifths (61 per cent) of existing pension-providing employers.
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The Government consulted further on specific proposals for actuarially reduced pensions. It proposed that after the age of 55 a scheme member might apply for early retirement. The pension payable in these circumstances would be based on final salary and the number of years of service in the normal way but reduced to take into account the increased length of time it would be payable. The employer would be able to withhold consent for early retirement on these terms for no more than six months. Following this additional consultation, the Government accepted the principle of actuarially reduced pensions within the scheme.
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The idea behind the introduction of pension systems by employers of labour is the protection of employees against penury after retirement. Pension schemes have gained popularity in many countries in recent times. In fact, it has become topical for discussion by policymakers in many countries who seek to facilitate privately-funded retirement revenue savings for ageing labour force (World Bank, 1994).The pension scheme is designed to provide revenue for retired workers to cater for their fundamental pecuniary needs. Consequently, most governments have made retirement benefits a key objective by ensuring that pension schemes are set up in their public service. Employers in the private sector are also encouraged to establish some retirement benefit schemes for their workers, though levels of compliance may not be as stringent as for the public sector. .The implementation of retirement benefits has been fraught with challenges which have warranted the need for stock taking of pension schemes by many nations on numerous occasions.