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Pensions in A Global Context: Catherine Martens-Malik The International Securities Consultancy Limited
Pensions in A Global Context: Catherine Martens-Malik The International Securities Consultancy Limited
Pensions in A Global Context: Catherine Martens-Malik The International Securities Consultancy Limited
in a Global Context
Catherine Martens-Malik
The International Securities
Consultancy Limited
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Pensions In a Global Context - Agenda
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Global Trends- Changing Demographics
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Global Trends - Changing Demographics
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Global Trends - Changing Demographics
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ITALY -
population pyramids:
how they are going
2000 to change
Over 65
2001 18.4%
2015 22.3%
2025
Impact of low birth
rate, and ageing
population continues.
2050
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Global Trends – The Pensions Crisis
THE CAUSES
Higher dependency ratios
Beneficiaries living longer
Lower interest rates
Lower equity returns from many markets, and
Unrealistically generous pension promises made by
governments – to their own employees in particular, and the
population in general.
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Global Trends – The Pensions Crisis
THE RESULT
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Global Pensions Crisis - Range of Solutions
Increasing taxes
Raising the pensionable age
Reducing the more generous benefits
Moving from defined benefit to defined contribution
Broadening coverage to include the most disadvantaged
Introducing mandatory pension schemes, in some instances
(Australia, Korea, Hong Kong, Malaysia & historically
Singapore)
Introducing measures to encourage both individual private
provision for pensions, and savings more generally
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Global Pensions – Key Definitions (1)
Pension Schemes can be:
Segregated – the pension scheme has been set up as a
independent legal entity, separate from any other assets, and
protected from any misfortune that befall the pension scheme
sponsor.
Unsegregated – no separate legal entity; related funds/ assets
mixed up with the other assets of pension scheme sponsor, and
often used as part working capital.
Funded - The money has been put aside to meet actuarially
estimated future liabilities.
Unfunded - No specific funds have been put aside to meet future
obligations. Also known as ‘Pay As You Go’; the system operated
by most state schemes. An ‘unfunded’ company scheme would
show up as a liability in the balance sheet, but without any matching
pool of assets.
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Global Pensions – Key Definitions (2)
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World Bank Pensions ‘Pillar’ Model
Pillar Characteristics Participation Funding
0 Basic or ‘social pension’ to ensure Universal or Govt tax/general
minimum level of pension income for means tested revenues
all retirees
1 Public pension plan, publicly Mandated Contributions
managed (defined benefit or notional (collected by taxing
defined contribution) income), with some
financial reserves
2 Occupational or personal pension Mandated Financial Assets
plans (fully defined benefit or fully
funded defined contribution)
3 Occupational or personal pension Voluntary Financial Assets
plans (partially or fully funded
defined benefit, or funded defined
contribution)
4 Informal intra-family or Voluntary Financial & non-
intergenerational sources of both financial assets
financial and non-financial support to
the elderly, including access to
healthcare and housing
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Occupational Savings Schemes (OSS) - Introduction
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OSS – Defined Benefit v Defined Contribution
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Controls on Operational Savings Schemes
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OSS – Structural Controls
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OSS – Operational Controls
Applicable Generally
Record keeping and administration requirements,
auditing requirements, actuarial valuations.
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OSS – Controls on Service Providers
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OSS – Role of the Regulator
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What is happening in Pakistan?
Population Fertility
growth rates Population rates
1970 2.59% 59.6 m 6.28
2000 2.47% 142.6 m 5.48
2015 1.98% 193.4 m 4.11
2050 0.84% 304.7 m 2.06
Source: UN
see www.globalis.gvu.unu.edu and www.census.gov for more details
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What is happening in Pakistan?
Pakistan’s
population
pyramids
2000
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2000
PAKISTAN
2050
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What is happening in Pakistan?
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What is happening in Pakistan?
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Pensions In a Global Context
Thank you
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