Professional Documents
Culture Documents
[FREE PDF sample] Navigating Social Security Options Danny Pieters ebooks
[FREE PDF sample] Navigating Social Security Options Danny Pieters ebooks
[FREE PDF sample] Navigating Social Security Options Danny Pieters ebooks
OR CLICK LINK
https://textbookfull.com/product/navigating-
social-security-options-danny-pieters/
Read with Our Free App Audiobook Free Format PFD EBook, Ebooks dowload PDF
with Andible trial, Real book, online, KINDLE , Download[PDF] and Read and Read
Read book Format PDF Ebook, Dowload online, Read book Format PDF Ebook,
[PDF] and Real ONLINE Dowload [PDF] and Real ONLINE
More products digital (pdf, epub, mobi) instant
download maybe you interests ...
https://textbookfull.com/product/emerging-technologies-in-
brachytherapy-1st-edition-pieters/
https://textbookfull.com/product/current-psychotherapies-danny-
wedding/
https://textbookfull.com/product/social-security-1st-edition-
author/
https://textbookfull.com/product/management-seventh-edition-
danny-samson/
Queering Critical Literacy and Numeracy for Social
Justice: Navigating the Course Summer Melody Pennell
https://textbookfull.com/product/queering-critical-literacy-and-
numeracy-for-social-justice-navigating-the-course-summer-melody-
pennell/
https://textbookfull.com/product/freedom-indeterminism-and-
fallibilism-danny-frederick/
https://textbookfull.com/product/people-centric-skills-
interpersonal-and-communication-skills-for-financial-
professionals-2nd-edition-danny-m-goldberg-danny-m-goldberg/
https://textbookfull.com/product/social-security-american-
association-of-retired-persons/
https://textbookfull.com/product/digital-fortress-navigating-
cyber-threats-mastering-the-art-of-online-security-and-
privacy-1st-edition-david-goodlin/
Navigating Social
Security Options
Danny Pieters
Navigating Social Security Options
“This book contains nothing less than a full panoramic view of the entire world
of social security. The options presented therein, though condensed and easily
readable, offer an abundance of information covering the entire range of today’s
challenges for the organisation of social security. Clearly structured and formu-
lated, they help to open up horizons of choices instead of cementing ideolog-
ical positions—which is a most welcomed approach for advancing social policy
today.”
—Ulrich Becker, Professor and Director, Max Planck Institute
for Social Law and Social Policy, Germany
“A most useful, original and enlightening book in which Pieters, one of the
most prominent experts in this field, tackles the main challenges faced by Social
Security systems, offering all the key aspects that policy choices should carefully
take into account.”
—Borja Suárez, Director General for Social Security, Spanish Ministry
of Labour, Migrations and Social Security, and Professor,
Universidad Autónoma Madrid, Spain
“This book is the perfect sequel to Danny Pieters’ Social Security: An Introduction
to the Basic Principles, building on the policy dimension of our social security sys-
tems in a lucid, elegant and comprehensive manner.”
—Gijsbert Vonk, Professor of Social Security Law, Groningen
University, the Netherlands
“This book steers the reader away from the common, one dimensional, cost
reduction driven analysis of social security, into an understanding of the assump-
tions behind existing social security systems. It is only by understanding these
assumptions and their implications that policy makers will select the bold choices
needed to create a social security system for the 21st century.”
—Chris Gibbon, Independent Consultant and former Vice President
and Worldwide Leader of the Global Social Security Business, IBM
“A very useful enrichment of the social security discourse, this book offers a great
checklist from a social law perspective and is of interest to all social scientists.”
—Robert Holzmann, Fellow of the Austrian Academy of Sciences,
and Honorary Professor, University of New South Wales, Australia
Danny Pieters
Navigating Social
Security Options
Danny Pieters
Institute for Social Law
KU Leuven
Leuven, Belgium
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer
Nature Switzerland AG, part of Springer Nature 2019
This work is subject to copyright. All rights are solely and exclusively licensed by the
Publisher, whether the whole or part of the material is concerned, specifically the rights
of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction
on microfilms or in any other physical way, and transmission or information storage and
retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology
now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are
exempt from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and
information in this book are believed to be true and accurate at the date of publication.
Neither the publisher nor the authors or the editors give a warranty, express or implied,
with respect to the material contained herein or for any errors or omissions that may have
been made. The publisher remains neutral with regard to jurisdictional claims in published
maps and institutional affiliations.
This Palgrave Pivot imprint is published by the registered company Springer Nature
Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Preface
v
vi Preface
important to keep track of the most recent evolutions of the social secu-
rity systems in the various countries. Furthermore, a range of papers on
social security topics coming from the European Union, the Council
of Europe, the International Labor Organization, the World Bank, the
International Monetary Fund, the European Institute of Social Security,
the International Social Security Association, and the European Social
Observatory were important when drafting the present text. Many arti-
cles in the European Journal of Social Security and in the International
Social Security Review also contained valuable information. I could not
include them all in my bibliography, but they are certainly to be included
in the reading list of anyone wanting to explore one or more of the 50
topics dealt with in my book. In the text I only refer to specific earlier
publications when I quote literally or cite substantive content.
I am grateful to my colleague Paul Schoukens for having read the
manuscript and having provided me with valuable comments. I also
thank Paula Cunningham and Thijs Keersmaekers for the linguistic and
editorial revision. Finally I should not forget to mention my students,
especially the students of the Master of European Social Security at the
KU Leuven with whom I have had interesting and sometimes lively
debates over many of the topics dealt with in this book.
May this book help anyone committed to the advancement of social
security to make the right choices!
vii
viii Contents
Bibliography 109
Index 117
CHAPTER 1
1 Present considerations are partially based on earlier work, such as Pieters, D. and
Schoukens, P., Social Security Quo Vadis? Interviews with Social Security Administrations
CEOs in 15 Western European Countries, New York: IBM Global Social Segment—IBM
Corporation, 2007.
4 D. PIETERS
and large, the risk consists of the assumption that it is no longer pos-
sible or suitable for a person of a certain age to work in order to make
his or her living. Hence social security’s provision of income replacement
for people attaining a certain age limit (old-age pension) or for people
who terminate their professional activity after having reached a certain
age (retirement pension). We thus basically distinguish between old-age
pensions in the strict sense, with respect to which entitlement depends
on attaining a specific age, and retirement pensions, with respect to
which stopping work is crucial and one is able to stop working from a
certain age. Traditionally, old-age pensions in the strict sense are asso-
ciated with universal schemes and people’s pensions, as we know them
in Scandinavian countries, the United Kingdom, and the Netherlands,
whereas retirement pensions are typical for professionally based social
insurance schemes. It is indeed logical that if work does not play a role in
being socially insured (but merely residency), then stopping working or
not working will not be relevant. Likewise, when you are socially insured
because of your work or because of your professional category, then it
is logical that ending this work and thus retiring from the active pop-
ulation, opens up pension rights. Yet we establish that this logic often
seems to have been abandoned: even in old-age pension schemes in the
strict sense, the possibility of cumulating work and pension will some-
times be restricted, and in many retirement schemes the continuation of
work after a certain age does not exclude pension entitlement. We will
return later to the policy options available for working while receiving a
pension. For now, let us suffice in establishing that the traditional choice
between an old-age pension in the strict sense, and a retirement pension
approach has become somewhat blurred. So in the end we are left with
the question of what it is that we are actually covering as a social risk
with our pension arrangements.
3 Repartition vs Capitalization
The pension scheme can operate based on the capitalization/funding prin-
ciple, the repartition/pay-as-you-go principle, or bookkeeping reserves.
Some statutory pension schemes operate on a mixed basis: partially with
repartition and partially funded. Sweden, for instance, has reformed its
statutory pension schemes in order to give them a mixed character, with
the larger part remaining on a repartition basis, and a new, albeit smaller
part, based on capitalization.
In a number of non-industrialized countries, the old-age pension
may take the form of a once-only payment on reaching pension age.
However, we will deal, as a rule, with periodical payments.
We can define a pay-as-you-go or repartition-based approach briefly as
one where current contributions serve to pay present-day social security
benefits. Only a few statutory compulsory pension schemes operate by
capitalization or in a funded way with current contributions serving to
finance the benefits to be paid later to the people having paid contribu-
tions. Complementary private insurance schemes, pensions in the second
and third pillar, generally operate on the basis of funding. In some coun-
tries, social security works with personal savings accounts, which can be
used for different social purposes, such as purchasing a home, covering
health care costs, life insurance, etc. These personal savings accounts can
also be perceived as an extreme form of capitalization.
Within the category of funded or capitalized pension arrangements,
we may distinguish between those based on defined contributions and
those based on defined benefits. When you have a defined benefit pen-
sion scheme, the contributions to be paid will vary over time in order
to maintain the intended benefit. In the case of a defined contribution
pension scheme, the final pension will vary depending on the duration
of participation, the profits or losses made while investing the funds,
and the administrative costs of operating the scheme. Today, second and
third pillar schemes are mainly based on defined contributions.
There have been heated debates about the pros and cons of funded vs
repartition-based pension schemes. In the last decades of the twentieth
century, there was strong pressure to move away from repartition and
go for (more) capitalization. The private sector strongly promoted the
funded approach, stressing the risk that in the future repartition-based
pension schemes would no longer be financially sustainable. Until the
crisis of 2008, it was also easy to demonstrate that the returns of the
1 POLICY CHOICES FOR INCOME REPLACEMENT IN THE CASE … 7
contributions for capitalized schemes were much higher than what you
could get for your contributions in a repartition-based arrangement.
Moving from a capitalization or funded system to a pay-as-you-go
or repartition system does not pose any special problems. The opposite
though is much more difficult, as it implies that after the transition the
active population would have to pay both for current pensioners (who
themselves lived under repartition) and for their own pension later. Such
a transition from repartition to capitalization therefore only seems fea-
sible after the (real or virtual) bankruptcy of the existing repartition
system and/or when (foreign or international) loans make it possible
to cover the entitlements gained under the previous repartition sys-
tem. The introduction of a capitalized or funded scheme alongside a
repartition-based scheme is easier and has been done in a number of
European countries.
The capitalization system, like certain forms of repartition, such as
the two examples mentioned above, will generally involve the founda-
tion of a fund through which the means of the social security system
will be collected and managed. Evidently, the more means such a fund
contains, the more influence it will wield on the financial markets. A
repartition system does not particularly need such a fund as it can do
with some circulating capital, a certain supply of money available to
meet claims (at present) more or less smoothly. A major advantage and
at the same time disadvantage of a funded scheme is the consequence:
in a capitalized approach there is an accumulation of funds, which can
be used by the funds, for instance to stimulate the economy or to exer-
cise economic power. However, at the same time it means that the
fund can be hijacked by its administrators or government, who use the
funds for purposes other than guaranteeing future pensions. The latter
has unfortunately been experienced recently in some Central European
countries.
Yet many continue to believe that a capitalization/funded pension
scheme is safer than a repartition-based scheme as it would guarantee a
person’s own pension better, distrusting the reliability of later genera-
tions to pay for this repartition-based pension in the future.
What is certain is that the future is always uncertain. Moreover, when
a system has already existed for a number of years, the means brought in
by the active participants in a funded scheme will in reality also be used
in the first place to cover the benefits paid out to the retired participants.
What, then, is the real difference between capitalization and repartition?
8 D. PIETERS
In a capitalized or funded approach the benefits paid out later will depend
on the development of the (mostly global) financial markets, whereas in
a repartition or pay-as-you-go approach, the future benefits will follow
the evolution of the wages in the (domestic) labor market. There are two
remarks to make with respect to this. First, if it is clear that we cannot
obtain certainty about our future (replacement) income when we are old,
neither in a repartition nor in a funded context, we may prefer to spread
the risk and to “put our eggs in different baskets.” In other words, a com-
bination of repartition-based pension with a funded pension, may be the
safer option. The second remark takes the form of a paradox: the distinc-
tion between a repartition-based pension scheme and a funded pension
scheme is important as long as it remains unimportant. What we mean by
this is that the heated discussions about the advantages or disadvantages
of one approach over the other will be relevant as long as the results of
the choice for one approach do not extravagantly differ from the alter-
native. Suppose, for instance, that we have a funded pension scheme, but
due to external reasons the built-up funds have disappeared. In such a
case would the government tell the elderly they are unlucky and will have
to do without a pension? We think not. In such a case the government
would probably introduce a repartition-based pension scheme immedi-
ately, as was for instance the case in Belgium after the Second World War.
Suppose on the other hand that we would have chosen a funded pension
scheme and the (international) financial markets do extremely well whilst
at home the labor market is in bad shape with high unemployment and
deteriorating real wages, this would normally result in extremely good
pensions compared to the wages of the active population. It is rather evi-
dent that in such a case the political authorities would intervene to stim-
ulate employment and increase the incomes of the active by, for instance,
levying higher income taxes and social security contributions on the high,
funded pensions. Should the political authorities not intervene, market
mechanisms would still probably play a role as the goods and services
that pensioners would purchase would increase in price, pushing up the
wages of those professionally active persons delivering the services and
goods. In other words, there is a difference between a funded and a repar-
tition-based pension approach, but at the end of the day, political deci-
sion makers and the market will ensure that there remains a reasonable
relation between the incomes of professionally active people and those of
pensioners.
1 POLICY CHOICES FOR INCOME REPLACEMENT IN THE CASE … 9
but it can also simply be that the years between reaching pension age and
the actual taking up of the pension benefit are accepted as participation
years (e.g., qualifying towards the minimum number of years to open an
entitlement).
Recently, some statutory pension schemes have also taken into
account the age of the retiring person in a different way: the amount of
the pension is established according to the life expectancy at the moment
of retirement. The life expectancy is not established on an individual
basis (e.g., according to health), but for the whole population. In gen-
eral, the difference in life expectancy between men and women is left out
of consideration.
Reaching the age of retirement often constitutes a turning point in
the life of the person in question. From one moment to the other, their
way of life and how they spend their days drastically changes. No won-
der that some research shows a higher mortality and a higher morbid-
ity in the first year of retirement, at whatever age that is. It is therefore
remarkable that more has not been done to promote a smoother transi-
tion from active life to retirement. This can be achieved amongst other
things, through the instauration of part- or half-time pensions, as some
countries have tried.
Raising the statutory pension age also affects other social risks. It is
self-evident that not only unemployment might increase as a conse-
quence, but the number of people incapacitated for work might also
increase significantly. It will therefore be of the utmost importance that
an increase in the age of retirement is accompanied with measures to
increase the employability of elderly workers, to adapt the work to be
performed by elderly workers to make it really workable, and to relax
working conditions for the elderly by, for instance, granting them more
flexibility as to their working hours or through the provision of a greater
holiday entitlement.
periods can contribute to pursuing special social goals with such prac-
tices. Nevertheless, taking into account numerous fictive years can be
an impediment to both the logic and the financial balance of a pension
scheme. The financial burden can be alleviated or lifted by making peo-
ple other than the person concerned or his or her employer pay contri-
butions corresponding to that period. As such, the state or the social
security institution can be involved as a debtor paying social security con-
tributions for the pension scheme. Yet quite often fictitive years are being
introduced without consideration of their financial impact as this will
only appear after twenty or thirty years. It allows politicians today to take
social measures, passing the bill on to future generations.
In some countries, general provisions on the age of retirement and
the number of years of participation will be set aside for those persons
deemed to have carried out particularly heavy, dangerous, and age-related
professional activities. Miners, ballet dancers, pilots, policemen/women,
warders and professional sportsmen/women, for instance, will thus often
be able to enjoy an old-age pension at a much younger age and after a
rather limited number of years of participation. In a few countries, the
same goes for women who have given birth to a number of children. The
aforementioned categories may then not only be eligible to enjoy having
fictive years of participation taken into account, but may also sometimes
be favored directly, by being granted more favorable conditions relative
to age and years of participation. These exceptions may be highly appro-
priate, but one should invoke them with prudence as they could end up
as real privileges for those groups who succeeded in gaining the qualifica-
tion of performing a heavy or dangerous job.
Finally, with regard to the conditions regarding the length of an individu-
al’s working life that affects his or her eligibility for a full pension, we observe
that there is currently a trend towards converting what used to be condi-
tions expressed in years or months into weeks or days of work. This technical
change aims to take better account of part-time work and to include more
atypical work patterns. This may especially benefit female workers.
will be left with a much weaker (or no) pension record! We ask ourselves
whether this is still acceptable today, especially in the light of the fact that
the pattern according to which a man and a woman get married and have
children and the marriage ends by the death of one of the spouses has
become the exception rather than the rule. Still, our social security sys-
tems seem to consider such pattern as the default. Is it not time for our
statutory pension schemes to start reflecting social reality more closely?
A couple, married or not, constitutes an economic unit, a household, in
which a series of activities, at home and outside, have to be performed.
The partners distribute these tasks between themselves according to
their abilities, skills and preferences. Some activities are remunerated and
therefore recognized as work by our social security systems. The income
from these activities benefits the household, just as do the unpaid activi-
ties that are performed. So why not establish individual pension accounts
based on the totality of the income from work generated by the two
partners, divided by two. If we did so, the partner having performed the
most unpaid work, very often the woman, would no longer be the vic-
tim of pension conditions that do not take unpaid work into account.
Moreover, when calculating retirement pensions in this way, we could
easily abolish most of the survivor pensions. More about these pensions
later.
scheme. Most often only the earnings on the basis of which contribu-
tions were payable will be taken into consideration. In recent years, we
can observe a trend to taking longer periods of earnings into account, for
instance the average over not the last five, but the last twenty years. It is
self-evident that the more restricted the periods of earnings to be taken
into consideration are, the more beneficial it will be for the pensioner,
but the more expensive it will be for the pension scheme.
The basis of calculation will on average be higher when only the last
period of professional activity is taken into account rather than all the
years of participation in the pension scheme. This even holds true when
the basis of the calculation is re-evaluated from year to year in order to
take into account the depreciation of the currency throughout the years,
since (real) earnings will in most countries be relatively higher at the end
of working life than at its beginning or middle phase.
In some cases, the relationship to income does not or not really apply.
This is the case when the old-age benefit is calculated based on the con-
tributions paid earlier and when the latter themselves are not related to
income, or when the correctness of the paid (in principle income-related)
contributions cannot be checked.
Some pensions are completely unrelated to earnings and are instead
calculated purely on the basis of the amount of contributions that have
been paid. This will generally be the case for pension schemes operating
on the basis of capitalization. Here the pension amount will be deter-
mined on the basis of the profits/losses made from investing the funds
after deduction of the expenses of running the scheme (possibly plus a
margin for the private pension carrier). We have already mentioned the
two options that are available here: defined contribution with a variable
pension amount, or the exception today of a variable contribution but
defined benefit.
In most schemes, minimum and maximum amounts have been fixed
for the full old-age pension, be it directly or indirectly (notably by cap-
ping the earnings included in the calculation bases). The minimum pen-
sion is granted to anyone who has worked a full working life (or meets
the minimum number of years of participation needed to acquire a
right to an old-age pension) and whose old-age pension, when cal-
culated according to the normal rules would not reach a certain fixed
amount. As for the maximum pension: this ensures that anyone who
would be eligible for an old-age benefit that exceeds a certain maximum
limit when calculated in the usual way, will have their old-age pension
Another random document with
no related content on Scribd:
kantaa. Talonpoikaistaloja, pappiloita ja pikku viljelijäin asuntoja,
valkoisia, tilavia ristikkorakennuksia vähäisimmälläkin pieneläjällä,
maalaiskirkkoja ja pitkiä rivejä hedelmäpuita teitten varsilla. Koko
maa puutarhana vainioihin ruudutettuna, ja vainioitten välillä kukkais-
aidat.
*****
17.
— Minä myöskin!
Äiti oli ihmeissään siitä, että isä, joka muuten oli niin varovainen ja
harkitseva, nyt otti asian välittömämmin ja huolettomammin kuin hän
itse.
Niin tietysti. Yrjön mielipide merkitsi tässä kohden yhtä paljon kuin
heidän omansakin.
— Mutta muistatko, Yrjö, että nyt omistat kaikki yksin, vaan jos
hän tulee, saisi hänkin osansa?
— Niin, se ei merkitse yhtään mitään. Ajatelkaa mikä suuri
tapahtuma tämä sentään on! Heti menisin häntä vastaan.
Parin viikon perästä tuli sitten se pieni tyttö, oman maan lapsi! Ja
minkälainen hahtuva hän oli! Minkälainen utukarvainen untuva! Hän
oli miltei poispuhallettavissa — eikä juuri minkään näköinen.
Hiljainen ja ihmettelevä, arka ja kiitollinen. Hän janosi rakkautta ja
suli onnesta, kun hän sitä sai, ja oli ensi hetkestä niin herkkä
vaikutelmille, että hän oli ikäänkuin ympäristönsä hypnotisoima.
Yrjön entinen vuode oli tuotu alas vinniltä. Ja nyt lepäilivät Kirstin
valkoiset palmikot samoilla pieluksilla kuin kerran Yrjön
tasatukkainen pää. Liinakaapista oli otettu esille reikäompeleiset
lakanat ja tyynynpäälliset, isänäidin ompelemat, joille isä aikoinaan
oli laskettu hänen päivän valon nähtyänsä. Ne oli Yrjön vuoteeseen
laskettu ensimmäisen yön tervetuliaisiksi, ja nyt ne ottivat vastaan
pienen tyttölapsen. Iltasuutelon jälkeen hän heti nukkui kuin
vihdoinkin pesän löydettyään. Ja mummo oli tyttöä sylissään
tuuditellut ja matkan jälkeen viihdytellyt, kunnes se laskettiin omaan
pehmoiseen, lumivalkoiseen vuoteeseensa.
18.
Eräänä päivänä äiti luki Yrjölle kirjeen, jonka hän oli kirjoittanut ja
josta hän tahtoi tietää pojan mielipidettä. Yrjö teki silloin
huomautuksen jostakin lausunnasta, jonka hän ehdotti
muutettavaksi.
Isä ja äiti olivat poissa, ja mummo oli pannut ovensa kiinni, eivätkä
he uskaltaneet kertoa heille tuosta hurmaavasta Afrikanmatkasta
ennenkuin aikoja myöhemmin. Sillä silloin olisi heidät ehkä paha
perinyt, ja mitäs jos olisivat sairastuneet, niin olisi sanottu, että oma
syy!
Yrjö oli ainoa, joka heti sai siitä tietää. He juoksivat suoraa päätä
kuvaamaan hänelle seikkailuaan. Eivätkä he välittäneet vähääkään
siitä, että hän nosti sormensa ja oli olevinaan suuri. Sillä hän
ymmärsi heitä kuitenkin mainiosti.
Välistä näki hän ikkunastaan, miten Kirsti, Sirkka ja Eija juosta
lipittivät tien yli Lehtolaan. Silloin hän hymähti itsekseen, hyvin
tietäen, että heillä oli jotakin erikoisen hupaista mielessään.
Aina kun Kirsti tuli sinne tai kohtasi hänet tiellä, pani hän liikkeelle
parhaimman suomenkielensä ja sanoi aina samalla tavalla:
— Miten niin?
— Hän on koulussa vakava ja sulkeutunut — melkeinpä hiukan
jörö, ikäänkuin hän ei siellä erikoisesti viihtyisi. Mutta kotona hän
aina on loistavalla tuulella.
Koko tädin koti oli välistä yhtenä mylläkkänä, kun oli suuri ohjelma-
ilta ja talo lapsia täynnänsä. He täyttivät yläkerran ja alakerran ja
juoksivat portaissa ja muuttivat kuumeisella kiireellä pukuja tädin
omassa huoneessa. Ja se oli kaikki niin kauhean jännittävää, sillä
tädin tuttavat tulivat sitä sitten katsomaan.
Tietysti tahdottiin.