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  #361  
Old 12-21-2018, 04:49 PM
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Mary Pat Campbell
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SOUTH KOREA

https://www.ai-cio.com/news/korea-pr...ension-reform/

Quote:
Korea Proposes Pension Reform
The world’s third-largest pension fund is in jeopardy of being depleted by 2057.


Spoiler:
The South Korean government has unveiled proposals to help reform the country’s pension system, as an aging population combined with record-low birth rates threatens to deplete South Korea’s $578.7 billion National Pension Fund by 2057.

The country’s Ministry of Health and Welfare announced four proposals to maintain a balance between reinforcing recipients’ benefits and securing the fund’s stability, according to the Korea Herald.

“The national pension should be operated as long as the country exists,” Health and Welfare Minister Park Neung-hoo said at a press conference. “To make that possible, building the public’s trust in the national pension fund is important.”

The first proposal aims to maintain the current system with an income replacement rate set at 40% and insurance premiums at 9%. The basic pension for the elderly would be increased to 300,000 won ($265) per month in 2021.

The second proposal would only increase the basic pension to 400,000 won in 2022, leaving the income replacement rate and insurance premiums the same as the first. And the third and fourth plans focus on increasing the insurance premiums and income replacement rate at the same time.

Under the third option, insurance premiums would be raised to 12%, with the income replacement rate set at 45%, while the fourth plan would raise the premiums to 13% and set income replacement rate at 50%. The 300,000 won basic pension would remain the same as in the current system.

South Korea’s fertility rate is expected to fall to an all-time low this year, which creates several problems, including underfunded pensions, expanding debt, and economic decline. The average number of babies born per woman of reproductive age is due to be as low as 0.96, bringing it below one for the first time in history, according to a study commissioned by the Chosun Ilbo newspaper.

If the proposals are approved at next week’s cabinet meeting, they will be sent to the National Assembly by the end of December. The legislature is expected to proceed with the revision of the National Pensions Act in the second half of 2019.

And in a move to boost investment returns, the National Pension Fund said it would increase its ratio of risk assets, such as stocks and real estate, to 60% from 50%, and raise the ratio of overseas investment to about 45% from 30%, according to Reuters.


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  #362  
Old 12-21-2018, 04:53 PM
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ROMANIA

https://www.romania-insider.com/parl...sion-law-2018/

Quote:
Romania’s Parliament passes controversial pension law

Spoiler:
Romania’s Chamber of Deputies on December 19 passed the controversial pension law with 193 votes for, one against and 14 abstentions.

The ruling coalition, made of the Social Democratic Party (PSD) and the Alliance of Liberals and Democrats (ALDE), which no longer holds the majority in the Chamber, received support from the ethnic Hungarians’ Party UDMR after accepting some amendments, local Mediafax reported.

The main opposition parties, namely the National Liberal Party (PNL) and Save Romania Union (USR) will challenge the law for breaching the Constitution, USR president Dan Barna announced. He accused the PSD-ALDE coalition of selling false illusions to pensioners, but he did not specify exactly on what grounds will the opposition challenge the law to the Constitutional Court. One possibility is questioning the preliminary impact on the public budget, which any law must include in the documents sent to lawmakers along the text of the bill.

Separately, under the pension law, the benchmark used for calculating individual pensions will rise as of September, versus January under the provisions prevailing at this moment. The new pension law will thus ease the Government’s financial burden for 2019 while being detrimental to pensioners (therefore unfair, compared to the constant promises voiced by the ruling coalition) — but this might not breach in itself any constitutional provision.

The new pension law will increase the state’s pension expenditure by RON 8.4 bln (EUR 1.8 bln) compared to this year’s estimated level. The impact will be much higher in the following years.

https://www.romania-insider.com/inve...ion-law-draft/
Quote:
Investors’ association questions sustainability of Romania’s pension law draft

Spoiler:
The Coalition for Romania’s Development (CDR), an initiative that brings together the largest business organizations representing Romanian and foreign investors, warns that the draft law on pensions is unsustainable and creates a huge burden for future generations.

“We believe that all Romanians are entitled to a decent pension, but equally important is a balance between pensions and investments oriented towards development and future: quality education, adequate public health services, infrastructure and investment in research”, the Coalition’s press release reads.

According to the government’s own estimates, the planned increases will generate additional annual burden of EUR 18 billion, starting in 2022. Thus, in 2022 and afterwards, even under a highly optimistic scenario of annual GDP growth of 8% p.a. over 2018-2022, the new law will still generate an additional burden of about 6.6% of GDP estimated for 2022. This adds to the optimistic projection of the 3% annual budget deficit.


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  #363  
Old 01-02-2019, 10:51 AM
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CANADA

https://www.ai-cio.com/news/canada-l...ancement-plan/

Quote:
Canada Launches Pension Enhancement Plan
Enhancement will increase benefits and contributions for working Canadians.


Spoiler:
The Canadian government will launch the Canada Pension Plan (CPP) enhancement beginning in 2019, which will increase benefits and contributions, including a boost of up to 50% for the youngest Canadians.

Working Canadians will receive higher benefits in exchange for making higher contributions, and the enhancement also increases the CPP retirement pension, post-retirement benefit, disability pension, and survivor’s pension.

Prior to 2019, the CPP retirement pension replaced one quarter of a member’s average work earnings up to a maximum limit. But under the enhancement plan, that will begin to grow to one-third of a member’s average work earnings, and the maximum limit will gradually increase by 14% by 2025.

The enhancements will also raise the maximum CPP retirement pension by up to 50% for those who make enhanced contributions for 40 years.

“If you are receiving the CPP (or QPP) retirement pension and you continue to work and make CPP contributions in 2019 or later, your post-retirement benefits will be higher,” said the Canadian government in a release.

Canadians working and living in Quebec contribute to the Quebec Pension Plan (QPP), which provides similar benefits as CPP.

The Canadian government said that the enhancements, combined with the middle-class tax cut, will translate to a savings of almost C$60 ($44) per paycheck in 2019 compared with 2015 for a single person earning C$48,000, and almost C$210 in paycheck deductions for a single person earning C$75,000. It also said that a typical middle-class family of four will receive, on average, about C$2,000 more each year.

The increase in contributions under the enhancement plan will be phased in gradually over seven years in two steps. Beginning in 2024, a second, higher limit will be introduced, allowing Canadians to invest an additional portion of their earnings to the CPP.

Before 2019, employees and employers each contributed 4.95% on earnings to the CPP, but under the enhancement, those rates will be 5.10% in 2019, gradually rising yearly to 5.95% in 2023. Self-employed Canadians are responsible for both the employee and employer portions.

Additional changes to the CPP include greater benefits to parents whose income drops after the birth or adoption of a child; to people with disabilities; to spouses who are widowed at a young age; and to the estates of lower-income contributors.

“Canadians deserve fair and dignified retirements that recognize their hard work. That is why the Government of Canada took the initiative to strengthen and improve the Canada Pension Plan,” Filomena Tassi, Canada’s minister of seniors, said in a release. “These changes will help today’s workers plan for their retirement while building strong systems that support Canadians in their older years.”


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  #364  
Old 01-02-2019, 10:55 AM
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CANADA

https://business.financialpost.com/n...-contributions

Quote:
CPPIB plans safer investing structure for hike in Canada Pension Plan contributions
The extra CPP contributions arrive on the heels of a rocky year for the markets so risk is on investors' minds

Spoiler:
The country’s biggest public pension fund says it has laid the lower-risk groundwork to invest increased Canada Pension Plan contributions that start in 2019.

The Canada Pension Plan Investment Board (CPPIB), which invests funds for the CPP, said it will begin receiving and investing those additional amounts this week.

The added CPP contributions follow a deal that was struck by the federal and provincial governments in 2016 to enhance the plan and bolster payouts to retirees. Contribution rates for both employees and employers will rise to 5.95 per cent by 2023 from 4.95 per cent in 2018.

CPPIB is shorting $750 million worth of EU stock, making it one of the most active short-sellers in Europe, data show
Trade war, market drag creating opportunities in China, CPPIB chief says
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“Over the past year, CPPIB has worked to ensure that both the base CPP and the additional CPP amounts will be managed efficiently and with a view to the opportunities that may be created as the CPP Fund grows,” Mark Machin, CPPIB’s chief executive, said in a press release.

“We will invest the additional stream of CPP with the same attention to appropriate growth, risk control and transparency that Canadians count on.”


According to the release, the CPPIB has crafted an investment structure that will cover the different needs of the base CPP and the expanded one.

“This structure ensures fairness between the base CPP and additional CPP accounts, and that both benefit from CPPIB’s strengths and have a widely diversified portfolio with appropriate distinct risk characteristics for each account,” CPPIB said.

The extra CPP contributions arrive on the heels of a rocky year for the markets, so risk may be on the mind of many investors heading into 2019.

However, CPPIB’s strategy for investing the extra CPP contributions could involve less risk than the one it uses for the base fund as it has said the additional account will be fully funded from the start.

In its 2018 annual report, the CPPIB said it would establish two investment pools on Jan. 1, 2019, one of which (the “lower-risk” Supplementary Pool, which would be in addition to the Core Pool) would only have assets of the additional CPP account invested in it. The Supplementary Pool would also only be made up of fixed-income securities.

“The Supplementary Pool is designed in such a way that, when combined in the right proportion with the additional CPP account’s interests in the Core Pool, the resulting overall risk and the underlying exposures are appropriate for the additional CPP,” the report said.

As of Sept. 30, 2018, the CPP Fund had assets worth nearly $370 billion. The CPPIB’s annual report added that the fund’s two accounts are each expected to have assets of around $840 billion by 2055.

At a June meeting of the House of Commons’ finance committee, Machin said the additional CPP “is more of a fully funded pool of capital versus the base CPP, which grows into its liabilities over the long term.”

Therefore, he added, according to a transcript, “we’re going to run a lower risk for the additional CPP and we’ll continue with the base CPP at the current risk levels.”


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  #365  
Old 01-04-2019, 05:37 PM
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BRAZIL

https://www.reuters.com/article/us-b...-idUSKCN1OY0UP

Quote:
Brazil's Bolsonaro signals weaker pension reform, concern over Boeing deal

Spoiler:
BRASILIA (Reuters) - Brazil President Jair Bolsonaro on Friday called for minimum retirement ages significantly lower than those proposed by his predecessor, sparking concerns among investors that he will back watered-down pension reform legislation.

FILE PHOTO: Brazil's President Jair Bolsonaro attends the handover of his new Defence Minister Fernando Azevedo e Silva in Brasilia, Brazil January 2, 2018. REUTERS/Ricardo Moraes
Bolsonaro also said regional security was the basis for his statement on Thursday that he might be willing to allow a U.S. military base on Brazilian soil as a way to counter Russian influence in Venezuela.

The newly inaugurated leader, speaking at an Air Force swearing-in ceremony on Friday, further said he is concerned that the latest proposal for the sale of 80 percent of Embraer’s commercial aviation business to Boeing Co could ultimately lead to the U.S. planemaker owning all of the new venture. It was the strongest expression of concern so far by his government over the tie-up.

Embraer shares were down more than 5 percent in late afternoon trading.

On pension reform, Bolsonaro told reporters at an Air Force event that the minimum retirement age would be 62 for men and 57 for women, effective five years after any legislation is passed.

SPONSORED

That is lower than the minimums of 65 years of age for men and 62 for women that were proposed by ex-president Michel Temer.

A reform of Brazil’s bloated pension system will be among Bolsonaro’s biggest challenges, since he has yet to build a base in Congress. It is key to erasing the country’s 130 billion reais ($34.76 billion) public deficit for 2019.

Investors on Friday sent interest rates higher on futures markets, showing disappointment about the lower-than-expected minimum age. The head of one major foreign bank’s treasury desk saying that “it was not expected by the market and its unambitious, to say the least.”

Bolsonaro told reporters his government would have to raise the IOF tax on financial transactions to compensate for tax breaks extended to Brazil’s poor north and northeast. But tax revenue secretary Marcos Cintra later said that would not be necessary, after meeting with the president.


ALIGNMENT WITH U.S.
Since his inauguration on Tuesday, Bolsonaro has used executive orders to open up Brazil’s economy, crack down on violent drug gangs and redraw the country’s foreign policy while pushing conservative social measures.

Bolsonaro, a 63-year-old former Army captain and admirer of Brazil’s 1964-1985 military dictatorship and U.S. President Donald Trump, has quickly deepened ties with the Unites States and Israel, with plans to move the Brazilian embassy from Tel Aviv to Jerusalem.

In a television interview on Thursday night, Bolsonaro said he would be open to the possibility of the United States operating a military base in Brazil, a sharp shift in a foreign policy that has traditionally stressed neutrality.

He said he is worried about Russia’s closeness with Venezuelan leftist President Nicolas Maduro, whom he has repeatedly called a dictator.

A visit to Venezuela by two Russian nuclear-capable strategic bombers in December infuriated the U.S. government and alarmed Brazil’s military.

“I have discussed this internally and with interest in other countries in South America,” Bolsonaro told reporters on Friday when asked about hosting a U.S. base.

Pompeo demands answers on U.S. citizen held in Russia
“We have to worry about our security and our sovereignty,” he said, adding: “I consider the American people our friends.”

GANGS STRIKE
On Friday, Justice Minister Sergio Moro ordered elite federal police to the northeastern state of Ceará, where suspected drug gang members have carried out dozens of attacks against banks and police barracks, and torched several buses. No deaths of bystanders have been reported.

Gangs across Brazil typically carry out such actions to spread fear and in response to police crackdowns on the streets or in prisons. Ceará state officials in recent days have said they would start sending prisoners to whatever jails had space, and not separate those incarcerated according to gang affiliation. Critics blasted the proposal, saying that it will result in immediate and bloody prison uprisings.

Earlier Friday, Bolsonaro stressed his desire for the quick passage of a bill to protect security officials and measures to open up competition in the banking sector.

The far-right president, elected on a law-and-order platform, warned in a tweet that sky-high violence would only slow if laws were passed to provide police and soldiers freedom from prosecution when on active duty.

“The legislative, executive and judicial powers have to make this commitment urgently,” he tweeted.

Throughout the campaign, Bolsonaro said he wanted to give police and soldiers peace of mind while on often-violent operations, and he has also advocated broader access to guns so people can defend themselves.

Critics argue those ideas only risk inflaming Brazil’s violent streets and worsening Brazil’s murder tally, nearly 64,000 people in 2017, a record.


https://www.ai-cio.com/news/brazils-...ension-reform/
Quote:
Brazil’s New President Eyes Privatizations for Pension Reform
Jair Bolsonaro predicts initial investments to be almost $2 billion.


Spoiler:
Jair Bolsonaro, Brazil’s new president, needs to tackle the nation’s pension reform, and a senior aide says the new leader’s privatization program is still under evaluation.

Bolsonaro was sworn in on Tuesday, and according to Chief of Staff Onyx Lorenzoni, had a successful first meeting with his full cabinet. Lorenzoni expects each minister to announce their highest priority early next week.

The new president wants to liberalize Brazil’s economy, eliminate socialism, end gang activity, and establish conservative approaches in education and other areas.

He announced plans Wednesday to work toward setting up pension privatization, tightening prison sentencing guidelines, and giving the Agriculture Ministry control over indigenous land claims.

“We will soon attract initial investments of around 7 billion [real], with rail concessions, 12 airports and 4 port terminals,” Bolsonaro tweeted. That translates to $1.86 billion in US dollars. “With the confidence of the investor under conditions favorable to the population we will recover the initial development of the infrastructure of Brazil.”

Bolsonaro did not provide further details. In his inauguration speech, he promised to “work tirelessly so that Brazil reaches its destiny,” adding that his “vow is to strengthen Brazil’s democracy.”

Paulo Guedes, the nation’s new economy minister and a large proponent of mass privatization, said in his Wednesday swearing-in speech that he would reduce taxes and fix Brazil’s unstable social security system, which is becoming too costly for the country to run due to its generous retirement benefits.

Men can retire at age 65, while women can cease working at 60 to receive their full benefits. If they want to retire early, Brazilians can do so at 55, but are only able to collect 70% of their final salary for the rest of their lives.

Due to pensioners choosing to collect their rewards at an increasingly higher rate, a troubled economy, and a titanic public debt, the social security system is one of the first ways Brazil’s leaders are looking to fix the situation.

Guedes also said he wants to shave Brazil’s tax debt to 20% of gross domestic product, from 36%, free the credit market from state banks, and cut back on protectionism.


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  #366  
Old 01-06-2019, 05:32 PM
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QUEBEC, CANADA

https://montrealgazette.com/news/loc...xpect-and-when

Quote:
Government pensions: What Montrealers can expect and when
Here are the details of what amounts pensioners might expect during the coming year as well as the payment dates.


Spoiler:
With 2018 having come to a rather chaotic end and 2019 looking like it may be filled with lots of political drama as well, there is one thing many Canadians can depend on — their government pensions. Here are the details of what amounts pensioners might expect during the coming year as well as the payment dates.

Recipients of the Quebec Pension Plan (QPP) (retirement, disability, orphan’s, surviving spouse’s pensions) who have signed up for direct deposits can generally expect to receive their payments on the last working day of each month. In 2019, these dates will be Jan. 31, Feb. 28, March 29, April 30, May 31, June 28, July 31, Aug. 30, Sept. 30, Oct. 31, Nov. 29 and Dec. 30.

The maximum monthly amounts for those applying for QPP benefits beginning in 2019 will be $1,154.58 for those 65 years of age, $738.93 for those 60 years of age (64 per cent of the maximum QPP pension at age 65) or $1,639.50 for those 70 years of age (142% of the maximum QPP pension at age 65). Please note that for those who began receiving QPP before 2019, they may not be entitled to the maximum 2019 amounts because of how QPP is indexed. Also, not everyone is entitled to the maximum QPP benefit.

Retraite Québec has a calculator on their website for those who wish to estimate what their maximum QPP benefits might be if they were to apply now.

The maximum monthly surviving spouse’s pension for those between ages 45 and 64 will be $931.43. For those ages 65 or over, they can receive up to $696.15 per month. If you are already receiving a retirement pension, you will be paid a combined pension subject to a maximum amount that might not be equal to the sum of both the survivor’s pension and the retirement pension. As a result, the amount of your surviving spouse’s pension could be reduced.



It should be noted that QPP benefits are taxable. Quebec residents who would like more information about these benefits can call Retraite Québec at 514-873-2433 or can apply for the benefits online.

For those who receive pension benefits under the federal Old Age Security (OAS) program, those payments can be automatically deposited into bank accounts, typically on the third-from-last banking day of the month. In 2019, these dates will be Jan. 29, Feb. 26, March 27, April 26, May 29, June 26, July 29, Aug. 28, Sept. 26, Oct. 29, Nov. 27 and Dec. 20.

The OAS pension is a monthly benefit available, if applied for, to most Canadians 65 years of age or older who meet certain legal status and residence requirements. Individuals are allowed to postpone receiving their OAS payments for up to five years. Those who take their OAS at a later time will receive a higher OAS payment.

To qualify for an Old Age Security pension, in addition to being age 65 or older, you must also be a Canadian citizen or legal resident of Canada on the day preceding the application’s approval or, if no longer living in Canada, must have been a Canadian or legal resident of Canada on the day preceding the day you stopped living in Canada. Furthermore, if you are a resident of Canada at the time of application, you must have lived in Canada for at least 10 years after turning age 18. OAS applicants living outside of Canada must have lived in Canada for at least 20 years after turning age 18.

If one is not covered by either of these scenarios, that person might still qualify for some type of pension, since Canada has social security agreements with many countries. For more information on OAS, you can call Service Canada at 1-800-277-9914 or consult the Government of Canada website.

The maximum OAS monthly benefit payment for the first quarter in 2019 will be $601.45. OAS pension payment rates are reviewed and adjusted, if necessary, in January, April, July and October to reflect any increases in the cost of living as reflected by the Consumer Price Index (CPI). For example, payments for this quarter were adjusted upwards by the increase in CPI or by 0.10%.

Unfortunately, those pensioners with individual net income that exceeds $77,580 in 2019, may have to repay part or the entire maximum OAS pension amount at the time they file their 2019 tax return. If the pensioner’s income exceeds $125,696 in 2019, they will have to repay all of the OAS benefits received this year. This is commonly referred to as the “claw back”, or more formally, as the OAS “pension recovery tax.” In the following tax year, the OAS payments will be reduced by the same amount as the OAS claw back from the previous year. OAS benefits are also taxable.

Please note your government pension amounts may vary from the numbers above depending on your own set of circumstances and when you began receiving your pensions. For questions regarding your own situation please contact the relevant government offices or consult their websites.


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  #367  
Old 01-06-2019, 05:35 PM
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BRAZIL

http://en.mercopress.com/2019/01/05/...ensions-reform

Quote:
Markets disappointed with Bolsonaro's watered down pensions reform

Spoiler:
Brazil President Jair Bolsonaro on Friday called for minimum retirement ages significantly lower than those proposed by his predecessor, sparking concerns among investors that he will back watered-down pension reform legislation.

The newly inaugurated leader also said he is concerned that the latest proposal for the sale of 80% of Embraer's commercial aviation business to Boeing could ultimately lead to the U.S. plane-maker owning all of the new venture. It was the strongest expression of concern so far by his government over the tie-up.

On pension reform, Bolsonaro told reporters at an Air Force event that the minimum retirement age would be 62 for men and 57 for women, effective five years after any legislation is passed.
That is lower than the minimums of 65 years of age for men and 62 for women that were proposed by ex-president Michel Temer.

A reform of Brazil's bloated pension system will be among Bolsonaro's biggest challenges, since he has yet to build a base in Congress. It is key to erasing the country's 130 billion reais (US$34.76 billion) public deficit for 2019.

Investors on Friday sent interest rates higher on futures markets, showing disappointment about the lower-than-expected minimum age. The head of one major foreign bank's treasury desk saying that “it was not expected by the market and its unambitious, to say the least.”


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  #368  
Old 01-07-2019, 12:51 PM
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GEORGIA

http://georgiatoday.ge/news/13986/Ne...Program-Begins
Quote:
New Accumulative Pension Program Begins

Spoiler:
On January 1, several new laws came into force in Georgia – mandatory inspections for private vehicles, a 20 GEL increase in monthly pensions, and the first part of the law on accumulative pensions.

Georgian politicians and academics debated the law on accumulative pensions for several months in 2017 and 2018 and it was adopted by Parliament on July 21, 2018. It has several phases – the first phase will automatically enroll all people working in Georgia under the age of 40, apart from self-employed people, into the new pension scheme. Workers 40 years and older and self-employed people can choose to voluntarily participate.

The new pension system is designed to give Georgians a retirement savings account that is more proportional to their earnings while they were working by taking a percentage of their pre-tax salary. The pension fund will be invested domestically.

Employees contribute 2% of their pre-tax salary, the employer contributes an amount equal to 2% of the employee’s pre-tax salary, and the government contributes an amount equal to 2% of the employee’s pre-tax salary. If an employee’s salary is greater than 24,000 GEL ($8,888) per year, the government contributes only 1%, and if an employee’s salary is greater than 60,000 GEL ($22,222) per year, the government does not contribute at all. The self-employed can participate with a 4% personal contribution.

The possibility to opt out of the program will open in June of this year, returning the pension contributions made on behalf of an employee to the respective contributors. This ‘opt-out’ design is popular for pro-social policies in many countries, and sees a much higher rate of participation in programs than the standard opt-in design. The field that spearheaded this design, behavioral economics, was recognized with a Nobel Prize awarded to Richard Thaler, often called the “father of behavioral economics,” in 2017.

When Georgians reach the official state retirement age – 60 for men and 55 for women – they will have access to their pension funds, distributed in monthly installments. The new pension scheme will not affect the current system, by which every retired Georgian is eligible to receive 200 GEL ($75) a month – a rate which increased by 20 GEL from January 1.

For those already near retirement age – a person who joined in the pension scheme five years or less before retiring will be able to withdraw their full contribution upon reaching retirement age. Otherwise, an amount will be distributed each month, as calculated by the National Statistics Office based on the average life expectancy for Georgian men and women. In the case of a person’s death before reaching the average life expectancy, the remaining funds will go to that person’s heir.

Accumulated pensions are private property and cannot be accessed by banks or courts to cover debts or administrative fines.

Participants in the scheme will have three options, low risk, medium risk, and high risk, correlating to the level of risk, and subsequent potential reward, of the investments for which a participant’s contributions will be used. During the first five years of the new program, participants will only be able to select a low-risk portfolio.

Since Georgian independence in 1991, the country’s pension system has been reformed multiple times. A flat rate pension was instituted in 1995. In 2004, social programs, including the pension fund, began to be funded by general budget revenues rather than the State United Social Insurance Fund (SUSIF), which was based on social contributions from employers and employees. From 2008 to 2012, pensions included a bonus of 10 GEL a month for people who had worked for more than 25 years, but in August 2012, pensioners stopped receiving long-service bonuses and instead received the combined amount as a flat rate pension benefit.

There is still quite a lot of uncertainty surrounding the new system, coupled with anxious memories of the Soviet collapse that led to the loss of the nation’s savings, but many are also optimistic that the experiment will be successful, ushering Georgian households into a more financially stable future.


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  #369  
Old 01-08-2019, 03:48 PM
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BRAZIL

https://www.publicfinanceinternation...sions-timebomb
Quote:
Can Bolsonaro defuse Brazil’s pensions timebomb?
By:
Gavin O'Toole
8 Jan 19
Tough talk will not help the new president resolve an explosive fiscal predicament, writes Gavin O’Toole.


Spoiler:
Brazil’s new leaders like to use incendiary language.

“Our pension funds are an aeroplane with five bombs on board that will explode at any moment,” Paulo Guedes said during last year’s electoral campaign.

The recently appointed economy minister’s metaphor is in keeping with the image of his boss, President Jair Bolsonaro – a far-right former artillery captain who took office last week.

Bolsonaro’s political programme is unquestionably explosive.

He makes much of his admiration for Brazil’s former military dictatorship – a third of his cabinet are former army officers – promises to ease gun laws and give security forces a free hand in tackling crime, supports torture, and flings verbal hand-grenades at minorities.

But tough talk will be of little use when it comes to solving the main challenge facing Brazil – pension reform.

Guedes is right: the accumulating pensions deficit – which in 2017 stood at a breathtaking US$61.3bn (£48bn) – is a fiscal timebomb.

Last week, the economy minister reiterated that curbing Brazilian retirement benefits is the most pressing issue facing the country and crucial to tackling a budget deficit of 8% of GDP.

Pensions have become a symbol of government paralysis as Brazil struggles to recover from a damaging two-year recession that Bolsonaro has pledged to end.

Whether he succeeds or fails will be determined not by his rhetoric, but by how good he is at old-fashioned congressional horse-trading.

Yet there are already signs that Bolsonaro has underestimated the complex politics of reform and is adopting a haphazard approach.

He failed to convince outgoing president Michel Temer to push through a pensions bill prior to his inauguration in order to make reform easier for him once in office.

After repeatedly promising to fast track the issue, Bolsonaro then delivered a blow to investors who had snapped up Brazilian assets in the wake of his election victory by conceding that congress was unlikely to play ball in 2018.

That was followed by a clumsy face-saving exercise in which the treasury secretary said a pensions overhaul could be approved in the first half of 2019 if the new president chose to run with Temer’s original bill – but later if he drafts his own.

By the eve of Bolsonaro’s inauguration, the message had morphed discernibly – with the president-elect indicating he planned piecemeal changes to navigate congress gradually.

It is far from the decisive start favoured by Guedes, whose relationship with his boss has become the most scrutinised feature of Brazilian politics.

Why reform is necessary

Pension reform is the litmus test for investors and credit rating agencies of Bolsonaro’s resolve to restore confidence in Latin America’s largest economy and regain the investment-grade rating it lost in 2015.

Spending on pensions in Brazil is among the highest in the world and a major cause of its US$1.5 trillion gross public debt, 75% of GDP.

Without reform, the World Bank has estimated pensions could consume the entire federal budget by 2030.

Moreover, demographics make matters even more pressing.

The average Brazilian retires at 58 but, with improving healthcare, life expectancy has soared and by 2050 the ratio of elderly people to those of working age will double, meaning that fewer workers will have to support more pensioners.

In short, by 2021 the Brazilian state will be unable to meet its pension obligations and – by any standards – reform will have to be drastic.

At this stage, all Bolsonaro and Guedes have indicated is that they plan to raise the minimum retirement age by two years.

Political minefield

Although restructuring its retirement system would merely bring Brazil in line with other Latin American countries, successive administrations have delayed or fudged to avoid strife.

The stakes are high: public sector workers angry at the prospect of cuts – including police officers – have already staged violent protests.

This helps to explain why Bolsonaro’s predecessor failed to make progress, even though pension reform was central to his agenda.

In February last year, Temer was forced to shelve a first vote on his plans ... and Bolsonaro was partly to blame.

The bill foundered for technical constitutional reasons after a decision to hand policing in Rio de Janeiro to the military to curb a wave of violent crime – wholeheartedly supported by Bolsonaro, then a federal deputy for Rio.

Temer’s failure illustrates why, ultimately, pension reform in Brazil is a political minefield.

Pension rights are enshrined in the constitution, which can only be amended by three-fifths of congress.

The unpopular Temer was singularly ill-equipped to build such support.

The question that arises, then, is whether Bolsonaro possesses the political skill to build a congressional super-majority behind an unpopular measure in a system where his own mandate reflects profound distrust in politicians.

Ominous portents

The early signs are not auspicious.

Bolsonaro’s own contempt for congress is now the stuff of legend.

During a 1999 interview when asked whether he would shut it down if he were president, he said: “I would perform a coup on the same day. [Congress] doesn’t work … Let’s go straight to the dictatorship.”

Moreover, his own congressional record offers little cheer.

Before winning the top job, Bolsonaro served seven terms as a deputy over 27 years – with nothing to show for it. Just two of his bills and motions have ever become law.

The new president has all but admitted he is economically illiterate – anointing the University of Chicago-trained Guedes as a “super minister” overseeing all aspects of the economy.

That is a problem, because reform will be politically costly for this millionaire investment banker when it hurts working people in one of the world’s most unequal societies.

Nor does it help that Guedes is himself under investigation over allegations that he mismanaged investments received from ... public pension funds.

The only card Bolsonaro has up his sleeve is the sheer unfairness of the pensions system, which is excessively generous to middle-class professionals in the public sector.

Public workers retire on average at 54 – and are paid up to eight times what private sector pensioners receive.

But the dramatic conundrum confronting Brazil’s new president is that among the groups that this system disproportionately benefits is the military, which is responsible for nearly half of the pensions deficit


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Old 01-10-2019, 10:42 AM
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https://www.cnbc.com/2019/01/08/bols...ets-happy.html
Quote:
Brazil's new president has limited time to pass key reform and keep markets happy, analyst says
Global investors cheered Brazilian stocks toward the end of last year amid expectations that Jair Bolsonaro will be able to push through changes to help the country's economy recover from a devastating recession.
However, time is of the essence for Bolsonaro if he wants to keep this momentum going.
"Sentiment could shift if the administration fails to make headway on pension reform over the next six months, thereby missing this historic opportunity," says one analyst.


Spoiler:
Jair Bolsonaro's presidential victory in Brazil last year propelled Brazilian stocks to a sharp rally to close out a wild 2018. But the new president has a small time window to push through key reforms.

The iShares MSCI Brazil exchange-traded fund (EWZ), which tracks a basket of Brazilian stocks, jumped 13.25 percent in the fourth quarter. Meanwhile, the iShares MSCI Emerging Markets ETF (EEM) dropped nearly 9 percent in that time period. Brazil's Bovespa index also gained 10.8 percent in the final quarter of 2018.

Global investors cheered Brazilian stocks toward the end of last year amid expectations that Bolsonaro will be able to push through changes to help the country's economy recover from a devastating recession. However, time is of the essence for Bolsonaro if he wants to keep this momentum going.

"The window to pass reform in Brazil is never open for long," said Elizabeth Johnson, a managing director at TS Lombard, in a note Friday. "Sentiment could shift if the administration fails to make headway on pension reform over the next six months, thereby missing this historic opportunity."

Brazil's economy has struggled for growth in recent years. Its economy contracted throughout 2016 before turning around in 2017. However, economic growth has struggled to stay near 1 percent over the past two years and has not broken above 2 percent in about five years.

One key issue hurting the Brazilian economy is the country's pension system. While most public pensions include a minimum retirement age, the Brazilian system pays high replacement rates — the percentage of a worker's pre-retirement income ultimately paid out by a pension program — and does so at a much lower age. Brazil's current retirement age is 60 for men and 55 for women. This has led to a ballooning deficit.

Bolsonaro has a chance to push through this reform and has made it a priority, said Johnson. He has already suggested raising the retirement age to 62 for men and 57 for women. While this proposal is far less ambitious that of former President Michel Temer's, it shows he "understands the challenges ahead," said Johnson.

Temer originally proposed raising the retirement age to 65 for men and 62 for women. Bolsonaro — a former army captain known for making racist and homophobic remarks — rode a wave of anti-establishment sentiment to win last year's election as Brazilian citizens grew tired of rampant government corruption, increasing violence and meandering economic activity.

That momentum has carried into the new year. According to a recent poll by Brazilian pollster Datafolha, 65 percent of Brazilians believe Bolsonaro's government will be good for the country. Brazilian stocks have also started off 2019 strong, with EWZ rising nearly 2 percent through the first four sessions of the year.

"Market sentiment will remain positive for the next six months," said Johnson in another note Monday, adding the chances of pension reform passing this year remain strong. "But if the pension reform debate drags on into the second half of the year, the chances of a meaningful pension reform will decline, which would in turn dampen market enthusiasm."


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