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

2. Equity Analysis for Pensions (Social Insurance)
Anita M. Schwarz
ECSHD
March 2005

3. 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

4. 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

5. Fiscal Sustainability

6. 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

7. Equity within a Cohort

8. 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