Public Pensions

Brownfield infrastructure has come to the fore of policy debates in the U.S., Australia, Britain, Canada and South Korea, in addition to other jurisdictions seeking to attract and retain institutional capital for infrastructure investment.

In this article, the authors examine the underlying financial economics, public policy and risk management dynamics; present new data on institutional capital flows (2005 – 2015); and analyze the preponderance of public pension investors within the sub-asset class.

The paper is focused on pensions systems in the light of two case studies which are antagonistic within the capitalist economy. On the one hand, the case of the Spanish pension scheme, based on the principle of intergenerational solidarity. This system, conquered by the working class after decades of struggle, constitutes the backbone of the Spanish Social Security system thanks to the creation and development of indirect and deferred wages. On the other hand, the Chilean pension scheme imposed by the Pinochet dictatorship and subsequently maintained. This system, based on individual capitalization and private management, rejects the principle of solidarity and, therefore, it makes impossible the construction of a decent pension structure. The comparison of the Spanish and the Chilean pension systems can be expressed in just one revealing fact: while in Spain pensions reach on average 79% of the last salary earned, in Chile benefits barely reach 33% for male workers and 25% for female workers. The analysis of both cases is framed on the critique of political economy and hence it is totally opposed to the current mainstream in economics. Instead of assuming methodological individualism and a harmonious view of human societies, as orthodoxy does, the critical paradigm conceives capitalist economy as a dialectic process determined by the existence of social classes with different and opposed interests.

This article provides a survey of selected aspects of the relationship between public and private pension provision in European countries in the Organisation for Economic Co-operation and Development and compares this with other regions of the OECD. Population ageing has led many OECD countries to undertake a wide range of pension reforms. The overall effect of these reforms has in many cases been to significantly reduce public pension promises. This, in turn, has increased the interest in the role of private pensions, which has expanded significantly in a number of OECD countries. The article discusses the extent to which a number of countries will need to further increase private provision in order to guarantee adequate future retirement incomes.

Public Pension Plans and Inflation: Assumptions Used at the
State and Local Level in the United States and Other Selected Jurisdictions

In the wake of the 2007 to 2009 global economic downturn, public pension plans, how they are
managed, their funding levels, their annual costs, and the assumptions they use, among other
related topics, have received increased attention. While there are many challenges pension
boards, administrators, actuaries (and other technical professionals), and elected and appointed
officials must address regarding these plans, decisions on assumptions certainly have major
impacts on the overall fiscal health of public pensions. Should assumptions be off, plans can
appear more well- or less- funded than they really are with sponsoring governments and their
employees possibly contributing too much or too little to the plans.

Uruguay realizó una reforma estructural en su sistema de previsión social en 1996. Se introdujo un sistema mixto, con un pilar de reparto administrado por el estado y un pilar de capitalización individual con fondos administrados por empresas. La afiliación al sistema fue obligatoria para todos los menores de 40 años cubiertos por el Banco de Previsión Social (BPS). Sólo aportan al pilar de capitalización los individuos de altos ingresos, mientras que los de
bajos ingresos tienen la opción de contribuir a ese pilar. Quienes ejerzan esa opción tienen un premio en la prestación del pilar de reparto. Simultáneamente, se introdujeron cambios importantes en los parámetros del sistema de reparto sobreviviente, básicamente aumentando la edad mínima de retiro femenina y disminuyendo las tasas de reemplazo.
Las principales especificidades de la reforma uruguaya son: a) que el pilar de reparto continúa siendo el más importante desde el punto de vista de la cobertura, las contribuciones y las prestaciones, aún después de alcanzada la madurez del nuevo sistema; b) que dentro de las administradoras de fondos existe una de propiedad estatal, que, además, ha captado la mayor parte de las afiliaciones; y c) que no dio lugar a ningún tipo de reconocimiento de deuda a los afiliados.
En este trabajo se realizan proyecciones de los ingresos, egresos y resultados financieros del BPS, con y sin pago de intereses, para el período 1996-2050. Estos cálculos se basan en un modelo que simula la trayectoria de 840 individuos representativos. Las proyecciones se realizan para diversos escenarios de crecimiento económico y de tasa de interés. Como ello se hace tanto para situación de reforma como para la hipótesis de ausencia de reforma, se puede medir el efecto de la reforma sobre esas variables. Asimismo, se estima la deuda implícita en el viejo sistema en 1996.
Las estimaciones muestran que el resultado fiscal primario se reduce a largo plazo en 2,1% del PBI, independientemente de la trayectoria del PBI per cápita. Esto se logra reduciendo el gasto en prestaciones del pilar de reparto en aproximadamente 5,7% del PBI, que se contrarresta, en parte, con el desvío de contribuciones hacia el pilar de capitalización en alrededor de 3,5% del PBI. A corto y mediano plazo, en cambio, el déficit primario aumenta entre 1,6% y 1,8% del PBI, tanto por la reducción de las contribuciones al pilar de reparto como por un aumento de las prestaciones. El resultado fiscal total, incluyendo los intereses pagados por la financiación del déficit primario, es altamente sensible a las hipótesis sobre crecimiento y tasas de interés. No obstante, el efecto de la reforma es, en la mayoría de los escenarios, el de contraer el déficit a largo plazo entre 0,5 y 2% del PBI.

This series presents research findings based either directly on data from the German Socio-Economic Panel Study (SOEP) or using SOEP data as part of an internationally comparable data set (e.g. CNEF, ECHP, LIS, LWS, CHER/PACO). SOEP is a truly multidisciplinary household panel study covering a wide range of social and behavioral sciences: economics, sociology, psychology, survey methodology, econometrics and applied statistics, educational science, political science, public health, behavioral genetics, demography, geography, and sport science.