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  #381  
Old 02-05-2019, 12:49 PM
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JAPAN

https://www.ai-cio.com/news/stocks-h...-last-quarter/

Quote:
Stocks Hurt the World’s Largest Pension Fund Last Quarter
Japan’s GPIF lost a staggering $136 billion due to Q4’s rout in equities.


Spoiler:
As 2018’s fourth quarter shockwaves jolted investors worldwide, Japan’s Government Pension Fund Global (GPIF) was no exception, losing 9.06% of its assets, or $136 billion, in just three months.

The world’s biggest pension fund released materials showing the fund’s total assets fell from its record 165 trillion yen in September to December’s 150 trillion yen, its worst slippage since April 2008. The plan was down 4.31% for the fiscal year.

Foreign and domestic equities, which accounted for nearly half of the pension giant’s assets under management, supplied the most damage, declining 15.71% and 17.57%, respectively, in the quarter. For the fiscal year so far, which ends in March, they dropped 5.08% and 11.82%, respectively.

The fund’s benchmarks for the asset classes, the TOPIX and MSCI ACWI indexes, were down 15.58% and 17.60% in the quarter. For the fiscal year ending in March, they lost 4.88% and 11.86%.

The slide included the fund’s foreign bonds holdings, although the results were less bloody. That asset class took a 2.74% hit for the quarter, and only lost 0.45% over the current fiscal year. Foreign bonds were 17.41% of the Japanese pension fund’s portfolio.

The FTSE World Government Bond index lost 2.49% in the quarter, and shrank 0.38% in the fiscal year.

Domestic bonds, which were 28.20% of the fund’s portfolio, was the outlier with positive results, returning 1.01% for the quarter, and 0.36% in the fiscal year.

The composite benchmark was up 1.02% for the quarter, and 0.35% in the plan’s current fiscal year.

Short-term assets, the remaining 6.38% of the Japanese fund’s portfolio, were flat.



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  #382  
Old 02-18-2019, 09:29 AM
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BRAZIL

https://news.yahoo.com/brazil-presid...005131795.html
Quote:
Brazil’s President Bolsonaro may lose cabinet member amid pension debate

Spoiler:
(Bloomberg) -- Brazilian President Jair Bolsonaro may suffer the first loss of a cabinet member and key political ally just as he prepares to send his flagship pension reform proposal to Congress, local media reported.

Bolsonaro will probably fire his Secretary-General Gustavo Bebianno, formerly the president of the ruling PSL party, following allegations the party misused campaign funds during last year’s election, according to Folha de S.Paulo and O Globo newspapers. O Globo added that the president will make a final decision over the weekend.

Bebianno, speaking to journalists on Saturday, confirmed he’s likely to be fired but refused to resign, putting the burden of his dismissal on Bolsonaro. A spokeswoman for the presidential palace said she didn’t have information on the matter and couldn’t confirm or deny the reports.

The crisis in Bolsonaro’s inner circle, only 45 days into his government, comes at an inopportune moment when the administration pushes for a controversial pension overhaul that may determine Brazil’s economic path. The bill will arrive at the lower house on Wednesday and the government will need all the votes it can get to approve it -- Bebianno’s PSL currently rivals with the opposition PT as the largest party in the house.

“If the government is focused on approving the pension reform, it can’t be positive to fire someone who is supported by congressional allies in such a controversial manner,” XP Investimentos’ political analysts wrote in a note to clients.

The accusations of improper handling of campaign funds, which Bebianno denies, have rocked Bolsonaro’s inner circle over the past few days, with one of his sons publicly calling the minister a liar. Commenting on the crisis, Vice President Hamilton Mourao said the president’s family should wash dirty laundry at home.

Bolsonaro and Bebianno had a tense meeting in Brasilia late on Friday, the newspapers reported. If confirmed, his resignation would be published in the official gazette on Monday, according to Folha.

(Adds comment from Bebianno in third paragraph, quote from analyst in fifth paragraph.)


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  #383  
Old 02-25-2019, 04:19 PM
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BRAZIL

https://www.reuters.com/article/us-b...-idUSKCN1QB2DM

Quote:
Brazil government warns of recession without pension system overhaul

Spoiler:
BRASILIA (Reuters) - Brazil’s Economy Ministry warned on Friday that the economy will slip into recession next year and official interest rates could more than double unless Congress approves measures to reduce the deficit in the country’s pension system.

The warning comes days after President Jair Bolsonaro presented his ambitious social security reform plan to Congress, which aims to save over 1 trillion reais ($295 billion) in the next decade.

Overhauling the creaking social security system is seen as critical to shoring Brazil’s public finances, boosting investor confidence, fostering growth and keeping interest rates and inflation under control, most economists say.

In its first official forecast on the potential impact on the economy over the next five years of reform or no reform, the Economy Ministry laid out starkly contrasting scenarios.

“In the event of no pension reform, GDP growth in 2019 will be 1 percent lower and Brazil will enter recession in the second half of 2020, approaching the level of losses seen in the 2014-2016 period,” the ministry’s economic policy division warned in the report.

It said growth this year would slump to 0.8 percent from 1.3 percent last year — far weaker than the market consensus of around 2.5 percent and much worse than the 2.9 percent “best case” scenario of reform being passed.

Recessionary forces would also deepen over coming years if the pension system stays unchanged, the ministry said. The economy would shrink by 0.5 percent in 2020, by 1.1 percent in 2022 and as much as 1.8 percent in 2023.

(Graphic: Brazil GDP scenarios - tmsnrt.rs/2BPaImH)

(Graphic: Brazil unemployment - tmsnrt.rs/2VgORvT)

(Graphic: Brazil interest rates - tmsnrt.rs/2BORtd3)

It said benchmark interest rates will soar past 11 percent by year end from the current record low of 6.50 percent, and as high as 18.5 percent by 2023. Most economists expect rates to be on hold for the rest of this year.

But if reform is passed, growth will accelerate, job creation will surge and interest rates will fall, the Economy Ministry predicted.

'Elephant-sized acquisition' unlikely: Buffett
The benchmark Selic rate could be reduced to a new low of 6.0 percent later this year while the economy could create as many as 8 million new jobs by 2023, it said.

Economists have already factored in pension reform into their forecasts and say the outlook is not that strong even if something is approved this year, most likely a diluted version of Bolsonaro’s bill.

Corporate and household balance sheets have not been fully repaired since the 2014-16 recession, the international picture is cloudy, and not everyone is convinced the new administration will deliver on its pledges.


https://www.publicfinanceinternation...ension-changes
Quote:
Brazil targets pension changes

Spoiler:
Brazil’s president has put forward plans to revamp the country’s pensions system, a move which the government claims could save more than $270bn over the next decade.

The proposal by president Jair Bolsonaro includes a minimum retirement age of 65 for men and 62 for women. Under the current system, workers can retire after contributing to the pension system for 35 years in the case of men and 30 in the case of women. The new proposals would delay full pay out of pensions until 40 years of contributions.

Many previous governments have tried to reform the pension system, which is running at a large deficit and is expected to struggle further as the population ages.

The proposals will have to be approved by both houses of Congress, and the opposition party has already vowed to block the bill, arguing the changes would unfairly impact the country’s poorest.

Bolsonaro, who was elected last year, previously said the reform of the pension system was the new government’s number one priority.

“We need to change the rules of the pension system,” said Leonardo Rolim, the official responsible for pensions at the Economy Ministry. “People are living longer and having fewer children, which means that the working population will decrease.”

The government said the proposed new rules would be implemented over a 12 to 14 year period. Bolsonaro also proposed increased contributions to the pension system from wealthier taxpayers and creating a private system of individual savings accounts, funded by employees, as an alternative to the state-funded pension.


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  #384  
Old 03-13-2019, 06:27 AM
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BRAZIL

https://www.reuters.com/article/us-b...-idUSKBN1QT2LX

Quote:
Brazil pension reform chief sticks to savings target and May vote

Spoiler:
BRASILIA (Reuters) - Brazil’s government is sticking to its goal of having its pension reform bill, with promised public savings of more than 1 trillion reais ($262.5 billion) over the next decade, ready for a vote in the lower house of Congress by the end of May.

A senior citizen walks on Copacabana beach in Rio de Janeiro, Brazil February 20, 2019. REUTERS/Sergio Moraes
In an interview with Reuters in Brasilia on Tuesday, Rogerio Marinho, secretary of social security and labor at the Economy Ministry, pushed back against market concerns that the timeline and savings target are too optimistic.

Investors say tackling Brazil’s crippling social security deficit is critical to putting the country on a firmer economic and financial footing. The Economy Ministry has warned that failure to pass any reform will plunge the economy into recession as early as next year.

“The proposal we are putting forward to Congress is one that we think is adequate for the country,” Marinho said when asked if savings of 1 trillion reais was an achievable target.

Asked if anything less was therefore “inadequate,” Marinho said the Brazilian parliament would discuss the bill and “make modifications, even improvements.”

The government’s reform package aims to raise the minimum retirement age for men and women, increase the length of time workers must pay into the system, and reduce benefits for rural workers and military personnel. The bill projects total savings over the next decade of just under 1.2 trillion reais ($315 billion).

Economy Minister Paulo Guedes said last weekend that 1 trillion reais was an “important line” in the sand. But recent surveys from Morgan Stanley and Brazilian brokerage XP Investimentos show investors expect that will be watered down to around 700 billion reais.

Marinho recognized that the complexity of the proposals and challenges in overhauling a decades-old system. The draft bill was only presented on Feb. 20, but he is confident it will be ready for a vote by the full lower house in May.

“In terms of timing, we are able to meet our deadlines. Everything will depend on the dynamics of the debating process in parliament,” he said. “We know pension reform is not an easy process. But we’re very happy to have that debate.”

Once passed by the lower house, the bill will go to the Senate for final approval.

While Marinho and other officials say support for pension reform among lawmakers has never been higher, a lack of political cohesion in Congress could delay approval. Some analysts say it could drag out until the final months of 2019.

In that regard, Marinho applauded President Jair Bolsonaro’s recent tweets, statements and video selling pension reform to the public, following criticism from some allies that he had been too silent on the issue.

Asked if pension reform depended on Bolsonaro’s support, Marinho said: “I think so, but it also depends on a narrative based on facts.”

Frustration rises as Venezuela's blackout continues
“He has credibility. Without doubt he is the leader of this process, and anything he does will be beneficial, including galvanizing and mobilizing people to get onside with this change that’s so necessary for the country,” he said.

Analysts at BNP Paribas on Monday noted that of Bolsonaro’s more than 500 tweets since becoming president, only five were about pension reform. That is fewer than the eight jokes he has tweeted out to his 3.68 million followers.


http://www.thebrasilians.com/2019/03...nce-in-brazil/
Quote:
Pension Reform Increases Confidence in Brazil
Spoiler:
President Jair Bolsonaro submitted to the National Congress a proposal for a New Pension System. The plan aims to fight inequalities and privileges in the public and private sector pension systems. The government expects to save about R$ 1.1 trillion in ten years under the new rules.

Positive Feelings

Good expectations about the reform of the pension system have increased the con-fidence of entrepreneurs, investors and con-sumers in relation to the country’s direction.

Calculated by the Getulio Vargas Foundation (FGV), the Entrepreneur Confidence Index reached 98 points in January, a five-year high, while similar indices for industry, trade, services and consumers saw new increases as well. The Consumer Confidence Index, for example, increased for the fourth consecutive month in January to 96.6 points – the highest for the indicator since 2014.

Reform Agenda

“Pension reform is the country’s watershed. It is what will determine if Brazil will grow more, if interest rates will remain low and if corporate earnings will increase,” Eduardo Velho, chief economist of Go Associados, points out.

The same scenario was also described by Haitong Bank economist Flávio Serrano, who sees pension reform as a key factor of stability and guarantee of economic growth in the future. “The approval of pension reform would generate an additional boost and certainly increase economic growth,” he says.

Positive Indicators

Buoyed by expectations regarding the economic reforms, Brazil continues to show good results in economic indicators. In 2018, domestic industry out-put grew 1.1%, marking two consecutive yearly increases, while the trade sector closed last year with sales up 2.3%, a five-year high.

At the same time, inflation remains under control and the Selic benchmark interest rate is at a historical low of 6.5% p.a. Reacting to the good moment in the economy, the financial market is even more optimistic.

Processing

In Congress, the New Pension System bill will be processed as a Proposed Amendment to the Constitution (PEC). Before being presented for voting by the plenary of the Chamber, it will be reviewed by the Constitution and Justice Committee (CCJ) and a Special Committee. If approved, it will then go to a vote in the Senate, where it will also be reviewed by that house’s CCJ before going for a plenary vote.


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  #385  
Old 03-14-2019, 05:34 PM
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BRAZIL

https://www.reuters.com/article/braz...-idUSL1N2101SK

Quote:
UPDATE 2-Brazil economy minister warns against severely watered down pension reform

Spoiler:
BRASILIA, March 13 (Reuters) - A diluted reform of Brazil’s pension system that delivers less than half the 1.2 trillion reais ($314 billion) in savings outlined in the government’s plan would threaten future generations, Economy Minister Paulo Guedes said on Wednesday

Guedes has said savings over the next decade from social security reform should total at least 1 trillion reais. If Congress waters that down to 500 billion, it would make it impossible to transform the state-based system to personal retirement accounts, he said.

“We need 1 trillion (reais) so we can have the financial muscle to fund the transition toward a system of individual retirement plans,” Guedes said at a ceremony at the central bank in Brasilia marking the swearing-in of Roberto Campos Neto as the bank’s new president.

“But if Congress dilutes that to only 500 (billion), you end up condemning your children and grandchildren, there’s no individual retirement funds, and the old system stays in place,” Guedes said.

Shoring up the social security deficit, by far the largest drag on the country’s creaking finances, is right-wing President Jair Bolsonaro’s cornerstone policy to revive the economy and stimulate investor confidence in Brazil.

Investors and private sector analysts are more skeptical about Guedes’s 1 trillion reais minimum target, with the median savings over 10 years expected to be around 700 billion reais, according to two major investor surveys recently.

At his swearing-in, Campos Neto repeated pledges he made at his Senate confirmation hearings last month to make Brazil more attractive to foreign investors, expand credit to small firms, and increase the presence of fin techs across the economy.

He also said the central bank must build on the gains delivered by the monetary policy path pursued by his predecessor Ilan Goldfajn, which was characterized by “caution, serenity and perseverance” and has seen interest rates anchored at a record low 6.50 percent for almost a year.

But the U.S.-educated former banker may have his work cut out. The economy almost ground to a standstill in the fourth quarter of last year and annual growth in 2018 was no better than it was the year before, at just 1.1 percent.

Early indications suggest 2019 will be just as challenging. Figures on Wednesday showed industrial production fell 0.8 percent in January, far more than expected.

Interest rate futures markets now imply more than a 60 percent likelihood that rates will be cut by January next year.


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  #386  
Old 03-18-2019, 06:38 AM
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U.S. vs EUROPE

not only about Social Security, but the point is comparison

https://www.forbes.com/sites/andrewb.../#5dd275c263ce

Quote:
U.S. Retirement System Rocks Europe
Spoiler:
Critics of the U.S. retirement system say it needs an overhaul. They look back wistfully on days when Social Security was more generous and traditional pensions more common. But that world exists today: it’s called Europe, and retirees there aren’t doing nearly as well as in the U.S.

Retirement savings can be complex, but the goal is simple: for retirees to maintain the same standard of living they had prior to retirement. The question is how best to do it.

While Europe faces the same challenges of aging populations that the U.S. does, nearly all European countries provide more generous Social Security-type benefits than the U.S. In Germany, government pension benefits are about 10% more generous than Social Security, according to the OECD. In France, benefits are nearly twice as high. European countries also have been slower to shift from traditional pensions to 401(k)-type plans, a transition that in the U.S. private sector is today more-or-less complete.

So this should produce richer, happier, more satisfied retirees in Europe than in America’s stingy, Hobbesian retirement world where savers must scrape together whatever they can? That’s what you’d think, but a new multi-country survey from the financial services ING tells a very different story.

ING surveyed workers and retirees in 15 countries, including Austria, Belgium, France, Germany, Italy, Luxembourg, Netherlands, Poland, Romania, Spain, Turkey, the United Kingdom, the Czech Republic, the United States and Australia. (Australia, some may be aware, is not located in Europe, but it’s in the data so I include it.)


ING asked retirees to respond to the statement: “In retirement, my income and financial position let me enjoy the same standard of living that I had when working.” Possible responses included: strongly agree; agree; neither agree nor disagree; disagree; strongly disagree.

In terms of maintaining retirees previous standard of living, the U.S. is much more successful than European retirement systems. In the U.S., 47% of retirees either “agreed” or “strongly agreed” that they could maintain their pre-retirement standard of living. Only Luxembourg was more successful, at 53%. But overall only 28% of European retirees agreed they could maintain their pre-retirement standard of living, including only 14% in France and 26% in Germany.

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Percent can maintain standard of livingA. BIGGS

It’s the same story when we look at retirees who strongly disagree with the statement “In retirement, my income and financial position let me enjoy the same standard of living that had when working.” These are the folks I’d consider to be facing a true “retirement crisis.” (Surveys of U.S. retirees that used the phrase "retirement crisis," such as from Vanguard, found similar percentages to the "strongly disagree" respondents in ING's survey.) In the U.S., only 9% of retirees characterize their incomes as severely inadequate, second only to Luxembourg. In Europe as a whole it’s two-and-a-half times higher at 23%. In France and Germany, nearly one-third of retirees say their incomes fall far short of what they need, three-and-a-half times the U.S. rate. It’s hard to avoid the conclusion that Americans are far better prepared for retirement than Europeans.


Percent of retirees who are unable to maintain their pre-retirement standard of living.A. BIGGS

One reason is that we save more and depend on government programs less. According to OECD data, U.S. retirement plan assets are far larger relative to our GDP than in the typical developed country. In the U.S., assets held in government or employer-sponsored retirement plans are equal to 150% of GDP. The OECD figures don’t even count the $10 trillion held by households in Individual Retirement Accounts, which would boost the total by another 45% of GDP. In the median OECD country retirement plan assets equal just 19% of GDP. Their Social Security plans may be more generous, but their retirement savings don’t match ours.


Pension funds as percent of GDP.A. BIGGS

I can hear it already: "Yes, but all these savings go to the rich. Real, typical Americans would be better off in a European-style retirement system that U.S. advocates are pressing for." In fact, no. The median U.S. retiree has a disposable income on par with typical retirees in Austria, Canada and Switzerland. The typical U.S. retiree has a disposable income 13% higher than in France and 19% higher than in Germany. “Sure, but in those countries retirees get free health care and so forth.” The OECD figures for disposable income start with gross income, net out taxes, but then add back government transfers like health coverage. I know it’s hard for the retirement crisis crowd to swallow, but we’re actually doing pretty well.


Median disposable income, over age 65A. BIGGS

It’s very tempting to talk ourselves down, especially when we’re trying to make big policy changes. It’s hard to make those big changes unless Americans feel that a crisis is breathing down their necks. But when it comes to retirement, it simply isn’t: only a tiny fraction of U.S. retirees have truly inadequate incomes and we can address their retirement crises through targeted, low-cost policy changes. But overall, U.S. retirees are doing fine, whether measured relative to their own ability to maintain their pre-retirement lifestyle or against incomes enjoyed by retirees in other developed countries. And the U.S., in good part because it has shifted away from defined benefit pensions, is a world leader in retirement savings. We should keep it up: after all, the real crisis in U.S. retirement savings is the defined benefit plans that have promised benefits without funding them.

Can we do better? Sure, and I’m now saying we shouldn’t try. We can fix Social Security, including a better safety net for the poor. We can encourage longer work lives, perhaps by lowering the payroll tax on older workers. We can expand access to private sector retirement plans, such as via multiple employer plans. By recognizing our retirement successes we can build on them rather than tearing them down.
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  #387  
Old 03-18-2019, 09:57 AM
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CHINA
https://thediplomat.com/2019/03/chin...ot-aging-well/
Quote:
China’s Pension System Is Not Aging Well
There may be more pressing issues, but the simmering pension crisis cannot be put on the back burner for much longer.


Spoiler:
This week, China’s leaders are gathering in Beijing for the Two Sessions — back to back meetings of the Chinese People’s Political Consultative Conference and the National People’s Congress — to assess the country’s policies and priorities for the coming year. Leading up to the meetings, state-run media outlet the People’s Daily asked the Chinese people to weigh in on which social, political, and economic issues matter most to them. The annual online poll, which opened on February 12 this year, has so far garnered about 4.5 million responses. The survey prompts netizens to choose from a list of 18 “hot topics,” among which are familiar buzzwords like fighting corruption, alleviating poverty, international relations, the housing system, a strong military, technological innovation, cultural confidence, educational reform, and more. This year, the top three “hot topics” were 1) fighting corruption, 2) rule of law, and 3) social security. The results of the survey show that within the topic of social security, respondents emphasized the need to “improve the basic pension for retirees and base pension for urban and rural residents.”

As a perennially top-ranked concern that affects billions, it is no surprise that social security cracked the top three for the fifth year in a row in 2019 amid a series of major reforms to the system. Against a backdrop of slowing economic growth and a rapidly aging population, the Chinese government is acutely aware that it needs to figure out how to take care of its elderly. The stakes are extremely high: in a culture that has long placed a high premium on age and respect for the elderly – and where the state has recently re-embraced and foregrounded Confucian ideals and values as a means to buttress social harmony and stability — care for the elderly and social security are linked closely to the state’s legitimacy.

Indeed, few social issues today stir sufficient concern and indignation to incite Chinese people to take to streets (or online message boards), but concerns about access to quality healthcare and eldercare are among them. According to China Labor Bulletin’s Strike Map, in 2018, there were 172 instances of workers protesting or striking over social security and pension-related concerns. Notably, in summer 2018, thousands of veterans across several cities staged protests over inadequate healthcare and pensions.

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The current system — notorious for its highly disarticulated, localized nature and inefficient collection processes — has led to apprehension among China’s middle class, the exclusion of some of the country’s most vulnerable populations, and a headache for government officials watching as the pension shortfall grows. For Chinese leaders, the pressure to respond to more immediate concerns brought on by declining GDP growth and fallout from U.S.-China trade tensions is great — but the simmering pension issue cannot be put on the back burner for much longer.

On the Brink

Accounting for nearly 70 percent of national social security collections in 2017, China’s pension funds are critical to the country’s social insurance infrastructure. But without generous central government subsidies, China’s pension funds would be deep into the red, with deficits projected to rise from 234 billion yuan (roughly $35 billion) in 2018 to 534 billion yuan by 2022. Already, nearly half of China’s provinces are slated to report operating shortfalls in their basic pension funds by 2022, compared to six in 2015, according to a report by the China Academy of Social Sciences. Some provinces are being hit harder than others. In July 2018, Heilongjiang, a province in northeastern China’s rust belt, was forced to delay pension payments because even with state subsidies, they could not meet last year’s pension liabilities.

Some of this discrepancy can be chalked up to employers — in both state-owned and private enterprises — not paying their due. Employer contributions in China are high, and to cut costs, companies often cut corners by underreporting wage payments, or hiring more part-time and temporary workers. A 2018 survey by social-insurance information provider 51Shebao found that only 27 percent of companies paid the entire sum of their social security contributions. Mark Frazier, professor of politics at the New School, and an expert on the Chinese pension system, points out that the highly fragmented nature of the social security system has both enabled and perpetuated tax evasion: “Social security collections are coordinated at the city level, so even across a province, the landscape can be highly unequal. Who will collect money from enterprises? The local tax bureau or the local Ministry of Human Resources and Social Security? Officials have trouble collecting from larger companies because in many cases, the executives outrank them, so it is relatively easy for enterprises to negotiate with local governments for favorable terms.” Complexities in collecting contributions and the high degree of fragmentation also mean workers and retirees face reduced pension benefits — and sometimes none at all.

The convoluted system causes great anxiety for workers and retirees trying to collect their monthly pensions — particularly migrant and temporary workers. The localized system makes registering for an urban pension prohibitively difficult for many migrant workers. In 2017, 62 million migrants successfully signed up as urban employees, only about 22 percent of the total number of such Chinese workers. If a migrant worker is unable to successfully register for their city’s pension scheme, their pension continues to be paid to their hometown. Lacking a central process to integrate pension schemes across localities, urban and rural pensions vary dramatically: retirees in Beijing, Shanghai, and Shenzhen collect around 4,000 yuan ($596) per month, while their counterparts in small villages claim as little as 90 yuan ($13) per month. This means that due to high cost of living, many migrants are forced to retire to their hometowns after living and working for decades in the cities they helped to build.

Commenting on a news article outlining forthcoming changes to the social security system, one worker nearing retirement complained, “I was employed in a work unit for more than 20 years as a temporary workers and never got promoted to full-time. The unit never contributed one cent to my pension — I paid into it myself for 15 years. Now I’m 51 years old and can’t retire. My mother has dementia, and my kid hasn’t gotten married and settled down yet. What is there to do?” On a similar article, another agitated worker asked, “I’ve been working for a company for 20 years, but they have only paid me 11 years of social insurance. Isn’t this illegal? Is there any way to make them pay? Why can’t the Social Security Bureau enforce their own rules?”

Getting Old Before Getting Rich

These issues are more urgent in the context of wider demographic issues and work force trends. By 2050, as much as a third of China’s population will be over the age of 60. And due to falling birthrates, the workforce is shrinking. According to a national survey conducted last year by the Ministry of Human Resources and Social Security, the ratio of workers to pensioners has declined dramatically. In 2011, every pensioner was supported by 3.1 workers (contributors to the fund). By the end of 2017, that ratio had fallen to 2.8-to-one, and the Ministry estimates that by 2050, it will be just 1.3-to-one. This imbalance will exacerbate the pension shortfall, causing provinces to rely even more heavily on central government subsidies.

Hyper aware of the economic and social frictions these issues cause (or threaten to cause in the future), central and local authorities have taken a number of steps to respond. For example, they have attempted to increase penalties for corporate tax evasion, developed the commercial pension insurance system, and made the system more user-friendly with digital guides and instantly replaceable social security cards. However, these efforts have met with derision (several netizens joked that they could not navigate the guide on how to navigate the pension system, let alone the system itself), and seemingly have made little discernable impact.

The current level of government spending on social services and security is unsustainable. According to a recent study published in the New York Times by sociologists Wang Feng and Yong Cai, China’s public spending on education, health care, and pensions has increased from 6.3 percent of GDP in 2007 to 11.6 percent of GDP in 2016 – growing faster than spending on military or domestic security programs. That rate is projected to double to 23 percent by 2050, equal to the share of GDP for all current government spending. Short of a serious overhaul and reform, the chronic issues plaguing the system are only likely to worsen.

To create a more centralized collection system, China passed an ambitious, much-hyped tax reform plan in July 2018. At the heart of the reform was a structural overhaul of state’s method of collecting social insurance contributions from companies: consolidating a notoriously fragmented social security system and ensuring greater corporate contributions are vital to closing the widening pension shortfall. Effective January 1, 2019, all local governments transferred responsibility for collecting social insurance fees to tax authorities, seeking to streamline the system and to make it more difficult for companies to evade requisite contributions. However, according to a recent report from Caixin, at least 10 provincial-level regions that released implementation notices have not yet begun collecting fees from companies, presumably in an attempt to avoid putting additional financial stress on businesses.

This lack of implementation highlights a larger dilemma facing Chinese policymakers: will they follow through on the 2018 plan to replenish dwindling coffers in social security, or will they choose to cut the tax burden to stimulate economic growth, effectively digging the pension deficit so deep that it may reach an estimate in excess of half a trillion yuan by 2022? According Frazier, “as long as the economic outlook remains uncertain, it will be difficult to persuade the leadership to push for full implementation of pension reforms. Even if they do enact reforms, companies will continue to find ways to evade providing coverage for all their employees. The deficit is likely to just get larger in the medium term.” Certainly, the risk of implementing these reforms is great. Stimulus plans and tax cuts might provide temporary relief for falling GDP numbers and the ripple effects of the U.S.-China trade war. But considering longer-term structural and demographic trends, the risk of not implementing serious pension and social security reforms may prove even greater.

Viola Rothschild is a research associate in China studies at the Council on Foreign Relations.


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Old 03-18-2019, 02:19 PM
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BRAZIL

https://www.gulf-times.com/story/625...itary-pensions
Quote:
Fight looms as Brazil govt mulls military pensions cut
Spoiler:
Brazilian military officers will have to contribute more into the social security system and for longer, Pension Reform Secretary Rogerio Marinho said yesterday, outlining what can be expected in proposals to be put to Congress next week.
Marinho said the overhaul of military pensions, one of the most controversial elements in the government’s cornerstone policy to slash social security spending, are not finalised but will be delivered by March 20, the administration’s self-imposed deadline.
He also said rules regarding military police and fire service pensions will be the same as the armed forces.
This should ease the financial burden on states, whose combined deficit with the federal government stands at some 200bn reais ($52bn), Treasury figures show.
Representatives from more than 10 Brazilian states have met with Economy Minister Paulo Guedes seeking financial aid, Marinho added, a number that he says will only grow.
“If any group gets any special benefit, it will be necessary to show what it will cost, and that this will mean less investment in housing and health,” Marinho said at an event in Rio de Janeiro.
President Jair Bolsonaro presented his pension reform bill, which seeks to raise the minimum retirement age for men and women and aims to save around 1.2tn reais ($314bn) over the next decade, on February 20.
Proposed changes to military pensions, which target eventual savings of less than 100bn reais, were left for a month later.
Bolsonaro, a former army captain and congressman who got his start in politics advocating better compensation for troops and police, has said he has overcome his previous resistance to pension reform, especially in the armed forces. His allies are urging him not to back down now.
“In my state there is a saying: if a cow gets through, the whole herd will follow,” lawmaker Elmar Nascimento, lower house whip for the DEM party, the government’s main ally in Congress, told Reuters this week.
Nascimento said police who often risk their lives fighting armed criminals, should get a special pension deal, but not the armed forces. “What is the sacrifice the armed forces are making in their careers? There is not war. A different pension system for the military is not justified,” he said.


https://www.reuters.com/article/us-b...KCN1QW29Q?il=0
Quote:
Brazil can't pull off pension reform without 1 trillion reais in savings: Economy Minister

Spoiler:
RIO DE JANEIRO (Reuters) - Brazil’s Economy Minister Paulo Guedes said on Friday that pension reform must deliver at least 1 trillion reais ($262.26 billion) in savings in order to fund a transition from the current system to individual retirement accounts.

Guedes said the government would consider privatizing state-controlled companies Petroleo Brasileiro SA and Banco do Brasil SA after Privatization Secretary Salim Mattar finishes his current slate of planned privatizations.


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Old 03-18-2019, 02:25 PM
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VERMONT

https://www.manchesterjournal.com/st...e-funds,567683

Quote:
Cynthia Browning: Insufficient state funds?

Spoiler:
Vermonters may wonder why there is a continual struggle to fund state initiatives, and why raising taxes is often discussed. One cause of this complex problem is the state's unfunded pension liabilities for the state employees' and teachers' retirement systems.

The state is paying current retirement benefits, but we do not have enough in the accounts to ensure that future benefits can be paid. Expert actuaries are in charge of setting the amount required to build up the funds. They have increased this annual payment based on longer lifespans of beneficiaries, increases in the size of salaries at retirement, or decreases in the rate of return earned on invested funds. The unfunded pension liabilities are a form of debt, but instead of staying at the same level so that it can be paid down, the amount can suddenly increase for reasons beyond the control of state government due to these changes in actuarial requirements.

This means that every year millions and millions more dollars from the state General Fund must be allocated to the pension funds. It becomes harder to fund child care, clean water, paid family and medical leave, weatherization, economic development, college education, and many other needed programs. What are the causes of this problem? It is a defined benefit system, so we must pay established benefits and cannot change them without permission of the beneficiaries. Years ago the full required annual funding payments were not made. And as mentioned above, the rates of return on fund investments have been lower than anticipated, retirees are living longer, and their salaries are higher so their pensions are larger.

The state has been making the required payments into the pension system in recent years, and when possible we have made extra payments with surplus funds. Ten years ago we renegotiated some benefits to reduce costs, but this has been overwhelmed by the recent increases in required payments. But it is not sustainable for the required payments into this system to continue to grow unpredictably so that it is difficult for the state to provide needed services to Vermonters.

Therefore I have introduced the bill H.447 with Rep. Linda Joy Sullivan of Dorset. This would impose a one percent tax on both the compensation of those state employees and teachers still working and on the pensions of those retired. There would be no new tax on anyone else. The revenue would be deposited in the pension funds, so beneficiaries would contribute directly to ensuring that their funds are solvent. Such additional amounts deposited will reduce the future unfunded liabilities significantly given returns on investment that will be earned over the years. And there would be more resources available for other programs in the state budget now. This proposal will likely be politically unpopular with teachers and state employees who would pay the tax. I honor them for their work and they deserve the benefits earned. I understand that I will likely be attacked for even suggesting this. But these retirement systems are costing far more than ever anticipated, and it is fair to ask beneficiaries to contribute more rather than imposing so much of that burden on others. I am obligated to offer a proposal to prevent the unfunded pension liabilities from taking up so much of state resources that it is hard to fund programs that benefit all Vermonters.

Cynthia Browning represents Arlington, Sandgate and Manchester in the state House of Representatives.

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Old 03-19-2019, 01:55 PM
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NIGERIA

https://news.wealth365.com/how-to-fu...ge-dependency/

Quote:
How To Fund Pension, Reduce Old-Age Dependency

Spoiler:
If Nigeria is unable to properly fund pension liabilities and provide social security to the aged, the country will grapple with increased old-age poverty and dependency in future.

A recent report released by the International Monetary Fund (IMF) indicates that global old-age dependency ratio is rising largely due to skyrocketing aging population in some countries.

Nigeria is still within the safe zone with a youthful population and old-age dependency ratio of 6.4 per cent in 2015, unchanged from the previous year.

The IMF defined old-age dependency ratio as ‘a measure of the burden that those over 65 years of age place on working-age generations.’

Nigeria’s low dependency provides immediate protection against retirement crisis but danger lies ahead if Nigeria fails to plan now.

IMF proffers two solutions: reduction in early retirement and increased public and private savings.

‘Encouraging higher private saving for retirement and attenuating long-term fiscal vulnerabilities will require further public pension reforms in many emerging market and advanced economies, but reforms must be carefully calibrated to avoid undercutting the welfare of future retirees or fuelling old-age poverty,’ the report stated.

In Nigeria, the Contributory Pension Scheme (CPS) was designed to encourage private savings for retirement but low adoption at the sub-national levels and the non-coverage of the informal sector means future old-age dependency crisis is not unlikely.

Despite abysmal pension savings in Nigeria, IMF is projecting decline in public saving globally as under current policies, public pension outlays in advanced and emerging market economies will increase by an average 1 and 2˝ per centage points of Gross Domestic Product (GDP), respectively, by 2050.

‘Younger people will have to save significantly more and postpone retirement by a number of years to enjoy pension benefits similar to those of today’s retirees,’ the report said.

Bismarck Rewane’sFinancial Derivatives Company (FDC) observed that pension saving is a huge challenge in Nigeria.

‘While saving for one’s future may seem like a necessary activity, a lack of confidence in the Nigerian system – due to issues of governance and corruption, employers’ inability to contribute to pensions, and poor performance on pension returns – significantly constrains pension penetration in Nigeria,’ the FDC reported.

There is also a concern that most pension account holders in the country are aged between 30 and 49 in a country where over half the population is below 30, contrary to the expectation that the age group to account for a considerable proportion of pension accounts.

In contrast, the US pensioned population accounts for more than 50 per cent of its working age population and the number is over 70 per cent in the United Kingdom.

The IMF recommended that financial sector and labour market policies should be considered as part of a pension reform package.

‘The ability of households to save for retirement and to diversify retirement-related risks will depend on the availability of a wide array of relevant financial products. Labour market policies should be geared toward encouraging participation by older workers, attenuating gender gaps, and tackling informality,’ the report said.

Speaking on reducing old-age dependency, the IMF First Deputy Managing Director David Lipton said that the cost of public pensions will increase by over 2 percentage points of GDP by 2050 globally but the increase will be particularly pronounced in emerging markets and low-income countries such as Nigeria.

Lipton urging countries to think through the most effective pension and social safety net systems-and then put in place necessary reforms.

On improving savings for retirement, Lipton said, ‘They need to consider steps like curtailing early retirement that would reduce long-term fiscal vulnerabilities.’ he said.

On reducing old-age dependency, he said there is need to ‘have room to provide more generous pension benefits. That would reduce the need for households to maintain high levels of saving as a precaution against old-age poverty. It would also reduce inequality.’

Meanwhile, the IMF report also made a case for ‘complementing the public pension scheme with a funded defined contribution scheme. This would provide a vehicle to encourage private saving. More ambitious reform to the pension system architecture, including shifting from a pay-as-you-go to a funded system, should be carefully weighed against transition costs to the budget.’


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