Pensions

International experience shows that there is no uniform model for pension reform. There are, however, clear principles that can provide useful guidance to policymakers as they develop appropriate solutions based on a country’s culture, political system, economy, and labor force structure. The World Bank’s general framework for pension reform urges policymakers to start with the following three steps:

• Environment: assessment of the macro-economic, social, and demographic environment, (initial conditions and capacities);
• Design: establishment of policy intervention objectives; selection and evaluation of the reform design architecture; establishment of the parameters of the scheme using actuarial modeling and analysis; and
• Performance: evaluate the system/s using generally accepted principles of pension design or reform, developed from international best practices.

These principles include the most relevant ones: i) accessibility (e.g. coverage), ii) adequacy, and iii) sustainability. Other principles are: i) affordability, ii) fairness, iii) predictability, iv) robustness, v) economic, and vi) administrative efficiency.

These principles are intended to help policymakers rule out bad policy choices, thereby freeing them to design pension systems that are consistent with international best practices while still having considerable latitude to craft solutions that are appropriate for their country’s social preferences and country-specific conditions.

Last Updated: Apr 05, 2016

The priorities for the Pensions & Social Insurance Global Solutions Group, a joint team of both the Bank’s Social Protection & Labor and the Finance & Markets Global Practices, are focused on topics of most concern to the countries where we are engaged – directly through country-specific projects, supported by global and regional knowledge management.

The top priority on the knowledge management agenda is to create a framework for formulating policies at the intersection of safety nets and pensions.  The continuing interest among policymakers in expanding the role of social pensions and finding innovative ways of expanding voluntary pension coverage require an evidence based approach. 

Additional priority areas include: civil service pension reform, retirement incentives and outcome and risk based supervision.  Collaboration across Global Practices are also a priority, especially with regard to the aging agenda.

The Bank has also been active in designing, improving quantitative and policy dialogue tools such as APEX and PROST, which promotes well-informed policymaking, bridging the gap between quantitative and qualitative analysis of pension regimes, and addresses challenges particularly when civil service pension schemes and/or others consume a disproportionate share of limited fiscal resources. The Bank has provided capacity building and knowledge transfer on improving old-age income security to more than 100 countries. 

Last Updated: Apr 05, 2016