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  #461  
Old 11-11-2019, 10:25 AM
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Mary Pat Campbell
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POLAND
https://www.ai-cio.com/news/poland-a...ension-system/
Quote:
Poland Approves Plans to Overhaul Pension System
The funds will be used to boost revenues.
Spoiler:
Poland is moving its state-guaranteed private pension benefits to IRA-like accounts. The shift is designed to trim the Polish government’s liabilities and save $5 billion thanks to reduced retirement outlays.

The government-backed private system, called OFE, is valued at about $43 billion. Private pension funds are owned and run by firms like MetLife, NN Group, and Aviva. The government is transferring assets to fill a budget gap and minimize uncertainty. Poles’ private pension money will be moved to the IRAs at a 15% fee, unless they ask to put it with the state insurer.

OFE manages almost 80% of the assets, which are shares in companies on the Warsaw Stock Exchange. In the 1990s, Poland created privately managed pension funds with partial contributions to the state pension system. Currently, the insurance institution collects a majority of mandatory contributions from employees, which is 19.5% of pre-tax earnings. A smaller amount is set aside for OFE.

Premier Mateusz Morawiecki was in a months-long battle with Finance Minister Teresa Czerwinska over the $11 billion fiscal stimulus program. Czerwinska, who was forced to step down in September, warned that the package could lead to a higher deficit. One of Morawiecki’s campaign promises was to dole out more money to pensioners.

In 2014, the government used public bonds, which amounted to half of the pension system’s assets, to lower its debt. What remained were funds that were heavily invested in riskier equities.


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  #462  
Old 11-14-2019, 10:04 PM
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BRAZIL

https://apnews.com/0c60f2b8ecb648e1a...e82042#new_tab

Quote:
Brazil Congress passes landmark overhaul of pension system

Spoiler:
SAO PAULO (AP) — The Senate gave final congressional approval Tuesday to an overhaul of Brazil’s pension system, capping years of stalled efforts to sway public opinion and rein in unsustainable government spending on retirement.

The Senate voted 60-19 to adopt changes for civil servants and private-sector workers, handing President Jair Bolsonaro his first major legislative victory. He proposed the constitutional amendment in February and, after some watering down, Congress’ lower house gave its approval in August.

The most meaningful change sets a minimum retirement age of 65 for men and 62 for women. That’s up from averages of 56 and 53, according to the Organization for Economic Co-operation and Development, a club of nations whose populations on average retire at about 66.

The overhaul also introduces progressive brackets for contribution amounts as well as limits for survivor benefits and includes a period for transition to the new system.

The intent is to curb a swelling deficit in Brazil’s “extremely generous” pension system, which accounts for some 40% of total federal spending, according to a note Tuesday from the research firm Capital Economics.

That load has grown along with life expectancy, and increasingly limits the government’s ability to direct funds toward other areas. Brazil will save about $190 billion over the next decade as a result of the overhaul, said Monica de Bolle, senior fellow at the Peterson Institute for International Economics.

“It’s good enough to put Brazil on a more sound fiscal path going forward into the medium term, and does address immediate population aging problems and so on,” De Bolle said in a phone interview.

The reform means Daniel Arag„o, a 38-year-old who works in human resources for the federal government in Rio de Janeiro, will have to labor an extra five years before he can retire. He accepts that sacrifice, despite what he perceives as some of the overhaul’s shortcomings.

“I can understand that reform is needed, or else the system will soon collapse,” Arag„o said.

Such awareness has been constructed over the course of years and reflects a shift in public opinion. Of people surveyed in July by pollster Datafolha, 47% supported the proposal. A reform submitted by Bolsonaro’s predecessor, Michel Temer, was less ambitious but got significantly less support. President Luiz Inacio Lula da Silva achieved only a partial reform after President Fernando Henrique Cardoso failed to make any changes.

The initial proposal of Bolsonaro’s far-right administration was more aggressive and aimed at saving more than $300 billion over 10 years. Congress removed some items, including a reduction of small benefits for elderly and disabled people with low incomes.

On the central artery of Sao Paulo, Brazil’s biggest city, 48-year-old Anibal Soares said he paid less attention to debate of the plan than he should have.

“I heard that after this reform I’ll have to work six more years to get the same pension. Six more years paying social security, for what?” said Soares, a salesman of farm products. “I’m not saying there shouldn’t be a reform, but I have the feeling it will be people like me paying for it.”

The Senate scheduled a debate on final amendments to the main text of the reform for Wednesday.

Tuesday’s vote was a win for Bolsonaro after several defeats in Congress. His administration reportedly plans to submit a follow-up proposal with more controversial changes to the pension system and will include states and municipalities. The lower house is evaluating a separate bill that would modify pensions of the military and police.

Several senators who voted for the overhaul said more will be needed.

“In a few years we will be debating another reform because this one was not enough. Whoever is the next president, he or she will have to deal with this debate,” said Sen. Alvaro Dias of the center-right Podemos party.


https://kfgo.com/news/articles/2019/...ction=business
Quote:
Brazil's Bolsonaro heralds 'great day' as Senate approves pension reform

Spoiler:
BRASILIA (Reuters) - Brazil's President Jair Bolsonaro on Tuesday hailed the Senate's approval of a sweeping overhaul of the nation's pension system as a launch pad for the wider economy, although voting on the last few remaining amendments was delayed to the following day.

Pension reform is seen by the government and many economists as crucial to stabilizing Brazil's public finances and restoring business confidence, conditions they say will lead to stronger and more sustainable growth in Latin America's largest economy.

The Senate approved the main text of the landmark reform by a margin of 60-19 late on Tuesday before Senate President Davi Alcolumbre suspended debate on amendments and convened a session to conclude the voting on Wednesday.

The voting is expected to approve the last four amendments and once it is concluded, Bolsonaro will sign his keystone economic proposal into law.

"Congratulations Brazilian people! This victory, which paves the way for our country to finally take off, is yours! Brazil is ours! GREAT DAY!" Bolsonaro tweeted on Tuesday from Asia, where he is making a series of official visits.

Speaking to reporters in Brasilia, Economy Minister Paulo Guedes said Congress had done "a beautiful job" and that he was "very happy with the result".

Pension reform has dogged successive governments over the past three decades and been at the center of congressional debate for three years running, while the social security deficit has steadily risen.

The bill passed by the Senate aims to save the Treasury around 800 billion reais ($195 billion) over the next decade via measures that include raising the minimum retirement age and increasing workers' pension contributions.

Brazilian markets rallied and stocks hit an all-time high on the legislative result. Economists have said the controversial cuts to social security spending are crucial to closing a fiscal deficit that cost Brazil its investment-grade credit rating.

"The (stock) market rallied a lot today, in part because of this passage," said Tony Volpon, chief economist for Brazil at UBS. "It looks like local investors who have been buying the market in the face of foreign selling are beginning to win the argument."

Brazil's benchmark Bovespa stock index <.BVSP> rose 1.1% to close at 107,197 points, breaking above 107,000 points for the first. The real rose more than 1%, touching 4.06 per dollar for the first time in more than two weeks.

The reform's passage through the lower house of Congress in July, sending it to the Senate, helped give the central bank the cover it needed to cut interest rates. Failure to pass pension reform would lead to higher risk premia in local markets, the central bank repeatedly warned this year.

Brazil's public finances are extremely stretched due in part to hefty social security outlays, but also because tax revenues have fallen far short of expectations due to weak growth.

The economy is on track to grow by less than 1.0% this year, lower than the previous two years and well below the 2% or more most economists and the government expected at the start of the year.

The government's original pension reform bill envisaged savings of 1.237 trillion reais over the next decade. That was diluted to just over 900 billion reais in the lower house, then down to around 800 billion reais in the first round of voting in the Senate.

($1 = 4.07 reais)


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  #463  
Old 11-15-2019, 07:25 AM
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https://finance-commerce.com/2019/11...oms-worldwide/

Quote:
Severe $15.8 trillion pension crisis looms worldwide

Spoiler:
The U.S., China and other leading economies confront a massive funding gap of $15.8 trillion in 2050 to ensure lifetime financial support for their aging populations.

That’s according to a report spearheaded by former U.K. Financial Services Authority Chairman Adair Turner for the prestigious Group of 30, comprised of current and former policy makers.

“If public policies and individual behaviors do not change, many countries’ pension systems will face a severe crisis, threatening either unaffordable public expenditure pressures or inadequate incomes for retirees,” Turner said in a statement.

The projected $15.8 trillion shortfall is adjusted for inflation so the actual nominal dollar amount in 2050 will be materially larger, equivalent to 23% of global gross domestic product that year, according to the 75-page report.

The G-30, which includes Bank of England Governor Mark Carney and former U.S. Treasury Secretaries Timothy Geithner and Lawrence Summers, mainly blamed antiquated pension and retirement systems for the yawning financing gap, which it pegged at $1.2 trillion in 2018. Smaller projected returns on savings — in an era of low interest rates — aggravate the problem.

The report – which covers 21 countries, including Japan, Germany, India and Mexico, accounting for 90% of global GDP – said the coming crisis is not just about pensions. Lifetime financial security also depends on the availability of public health, housing and transportation services, as well as on informal community and family support.

The G-30 advocated a mixture of policies to tackle the problem:

Increasing the official retirement age by at least four-to-six years by 2050 while enabling people to work longer. A quarter of the funding gap could be closed if retirees on average worked 20% of the time of standard-aged workers.
Promoting higher savings by individuals and increasing taxes to support public pensions. Such steps might include mandatory savings programs.
Accepting that expected incomes in retirement may need to be lower. For middle and high-income retirees, that might mean living on 60% of average pre-retirement incomes, rather than 75%.
The report’s working group, which included UBS Group AG Chairman Axel Weber and BlackRock Vice Chairman Philipp Hildebrand, also called for action to reduce the administration and asset management costs borne by people saving for retirement. That might include establishing national utilities to provide bulk processing and purchasing of asset management services.

Reforms to minimize investment management costs must be a priority, according to the report.

The G-30 said that while the shift by corporations away from defined benefit to defined contribution retirement plans like 401(k)s for their workers had in some ways been inevitable, it has not worked out well for many individuals. The group suggested hybrid retirement programs as a possible solution, including guaranteeing minimum investment returns for defined contributions.

“Reforms to defined contribution should enable individuals to benefit from collective investment management, at low cost, and not have their retirement savings hostage to market cycles as much as they are today,” G-30 Chairman and Singapore senior minister Tharman Shanmugaratnam said in a statement.

The report acknowledges that confronting the coming crisis will be difficult because it will involve potentially politically unpopular decisions.

Making it “even more arduous is that it occurs at a time when governmental institutions are increasingly mistrusted, mainstream political parties are under strain,” and voters are becoming more diverse as well as “susceptible to populist rhetoric and demagoguery,” the G-30 said.


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  #464  
Old 11-15-2019, 07:26 AM
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GREECE

https://www.reuters.com/article/us-g...KBN1XO23G?il=0

Quote:
Exclusive: Greece plans to sell off pension arrears to get cash upfront

Spoiler:
ATHENS (Reuters) - Greece plans to sell billions of euros of social security contributions owed to its pension fund to private investors to get cash upfront and facilitate recovering other receivables, senior government officials told Reuters on Thursday.

The country’s conservative government, which took over in July, is keen to boost investment inflows and fix major issues affecting economic recovery prospects, including bad loans plaguing the banking sector.

It is also looking at ways to repair the social security system’s overall balance sheet to strengthen its viability.

“There is a strategy to sell arrears the state social security system has not managed to recover in past years,” one of the government officials said.

The arrears represent social security payments for staff owed to pension funds by private companies in Greece, partly because of the country’s debt crisis.

The project, headed by Deputy Labour and Social Affairs Minister Notis Mitarachi, will look into selling a first batch of up to 12 billion euros ($13.22 billion) of legacy arrears out of about 35 billion on the social security system’s books.

The process will not involve securitization because issuing asset-backed securities may be treated as borrowing and face obstacles with Eurostat, the European Union’s statistics service that harmonizes statistical methods across its member states, one of the officials said.

Instead, the government will look into selling the arrears to private investors for a cash down payment and agree a profit sharing scheme from any recoveries. Selling such arrears will be done at discounts to the nominal value.

Potential buyers will need to use a servicer as do specialist funds which buy non-performing loans from banks.

The project will set Dec. 31, 2014 as a cut-off, meaning it will try to sell off arrears accumulated up to that date. It will focus on amounts owed above 100,000 euros. It will not include arrears which already have a repayments plan or arrears of the self-employed.

“It will be a way to get quick upfront cash and improve our ability to focus on collecting more recent arrears, relieving the current administrative weight,” the senior official said.

Later on Thursday, Labour Minister Yannis Vroutsis issued a statement denying that there was a plan to sell arrears worth 12 billion euros. The government officials, who spoke to Reuters, stood by their comments.

They said the state aims to fine-tune the process by the end of this year and proceed with preparatory work in the first quarter of next year so that sales can take place in the second quarter of 2020.

The government is also looking for an adviser for the project.


This looks like a pension obligation bond.... for their social security system.

This sounds like an incredibly bad idea.
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  #465  
Old 11-15-2019, 02:26 PM
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Originally Posted by campbell View Post
GREECE

https://www.reuters.com/article/us-g...KBN1XO23G?il=0



This looks like a pension obligation bond.... for their social security system.

This sounds like an incredibly bad idea.
I'm not sure. It sounds like they are selling bad debt. The private companies owe $x to the Greek SS. The govt promises a part of $x to the investor, to be paid if it is recovered. The investor wins if the PV of their % of recovered $x is higher than what they paid. The govt wins if $x was going to be $0 anyway.
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  #466  
Old 11-15-2019, 02:36 PM
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Quote:
Originally Posted by Steve Grondin View Post
I'm not sure. It sounds like they are selling bad debt. The private companies owe $x to the Greek SS. The govt promises a part of $x to the investor, to be paid if it is recovered. The investor wins if the PV of their % of recovered $x is higher than what they paid. The govt wins if $x was going to be $0 anyway.
Okay, it wasn't clear to me what exactly they were trying to do.
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