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Regulating private pension schemes : trends and challenges : [selected papers from the first conference of the International Network of Pensions Regulators and Supervisors (INPRS) held on 23-26 April 2001 in Sofia, Bulgaria] PDF

331 Pages·2002·1.7 MB·English
by  OECD
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« Private Pensions Series Regulating Private Pension Schemes TRENDS AND CHALLENGES No. 4 Private Pensions Series Regulating Private Pension Schemes TRENDS AND CHALLENGES No. 4 ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD) shall promote policies designed: – to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability, and thus to contribute to the development of the world economy; – to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development; and – to contribute to the expansion of world trade on a multilateral, non- discriminatory basis in accordance with international obligations. The original Member countries of the OECD are Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries became Members subsequently through accession at the dates indicated hereafter: Japan (28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic (21stDecember1995), Hungary (7th May 1996), Poland (22ndNovember1996), Korea (12th December 1996) and the Slovak Republic (14th December2000). The Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD Convention). © OECD 2002 Permission to reproduce a portion of this work for non-commercial purposes or classroom use should be obtained through the Centre français d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, tel. (33-1) 44 07 47 70, fax (33-1) 46 34 67 19, for every country except the United States. In the United States permission should beobtained through the Copyright Clearance Center, Customer Service, (508)750-8400, 222Rosewood Drive, Danvers, MA 01923 USA, or CCC Online: www.copyright.com. All other applications for permission to reproduce or translate all or part of this book should be made to OECD Publications, 2, rue André-Pascal, 75775 Paris Cedex 16, France. FOREWORD The First Conference of the International Network of Pensions Regulators and Supervisors (INPRS) was held on 23-26 April 2001 in Sofia, Bulgaria, and comprised: (1) the Regional Conference on Private Pensions in Central and Eastern European Countries and the New Independent States; (2) the Workshop on Pension Reform in the Baltic States; and (3) the Research Network of the INPRS. This First INPRS Conference, organised under the aegis of the OECD Centre for Co-operation with Non-Members, was hosted by the Ministry of Labour and Social Policy of Bulgaria, and sponsored by the OECD, USAID, the East-West Management Institute and Watson Wyatt. The International Network of Pensions Regulators and Supervisors was established by the representatives of pension regulatory and supervisory authorities from OECD Member and non-member countries on the occasion of the OECD Forum on Private Pensions organised in Prague, Czech Republic, in April 2000. The conference provided a unique forum for an exchange of experience and expertise on major policy issues crucial to private pension reform and the development of good practices and policy recommendations for private pension schemes. Major outputs included: (1) the endorsement by the INPRS members of the OECD Fifteen Basic Principles for the regulation of private occupational schemes, which provide general guidelines for developing an appropriate regulatory regime for private occupational pensions; and (2) approval of the Programme of Work and Structure of the INPRS. The present volume of the Private Pensions Series contains selected papers from the INPRS Conference and consists of five parts: Part 1 presents recent developments in private pension systems in the OECD area and in Asia; Part 2 looks at the interaction of public and private schemes in structural pension reform; Part 3 focuses on the regulatory treatment of occupational pension schemes; Part 4 describes supervisory regimes in selected OECD and non-OECD countries; while Part 5 is devoted to consumer protection issues, namely disclosure and education policies, and distribution practices. This publication has been prepared in Private Pensions and Insurance Unit of the Directorate for Financial, Fiscal and Enterprise Affairs by Juan Yermo and Nina Paklina, with the technical co-operation of Edward Smiley and Louise Hallum. The views expressed in this publication are the sole responsibility of the authors and do not necessarily reflect those of the OECD or its Member governments. The book is published on the responsibility of the Secretary-General of the OECD. 3 TABLE OF CONTENTS PART 1- DEVELOPMENT OF PRIVATE PENSION SYSTEMS IN SELECTED COUNTRIES EXPERIENCE AND TRENDS IN OCCUPATIONAL PENSIONS - TOUR D’HORIZON IN OECD COUNTRIES.......................................................................................................9 by Chris Daykin THE HUNGARIAN PENSION REFORM IN PERSPECTIVE – IS IT ALREADY REACHING PUBERTY?.....................................................................................................27 by Zoltan Vajda THE EVOLUTION OF PUBLIC AND PRIVATE INSURANCE IN SWEDEN IN THE 1990’S......37 by Edward Palmer PRIVATE PENSIONS IN ASIA: AN ASSESSMENTOF EIGHT SYSTEMS.................................51 by Mukul Asher PART 2 - PUBLIC AND PRIVATE PENSION SYSTEMS INTERACTION PUBLIC-PRIVATE INTERACTION IN STRUCTURAL PENSION REFORM...............................105 by Dr. Katharina Müller THE RELATIONS BETWEEN THE PUBLIC AND PRIVATE PENSION INSURANCE SYSTEMS: THE BULGARIAN AND FOREIGN EXPERIENCE................................................................117 by Jordan Hristoskov PART 3 REGULATION OF PENSION FUNDS TRENDS AND CHALLENGES IN PENSION PROVISION AND REGULATION........................125 by Chris Daykin REGULATION OF OCCUPATIONAL PENSION SCHEMES IN IRELAND................................137 by Mary Hutch 5 DESIGN AND MANAGEMENT OF OCCUPATIONAL DEFINED CONTRIBUTION PENSION SCHEMES: LESSONS FROM THE ADMINISTRATIVE COST LITERATURE..........................151 by Hazel Bateman EMPLOYER PROVIDED PENSIONS PORTABILITY IN OECD COUNTRIES. COUNTRY SPECIFIC POLICIES AND THEIR LABOUR MARKET EFFECTS..........................................169 by Vincenzo Andrietti PART 4 – PRIVATE PENSION SUPERVISION MANAGEMENT OF SUPPLEMENTARY PENSION INSURANCE IN BULGARIA: TRENDS AND ISSUES.....................................................................................................233 by Nikola Abadzhiev, Ph.D. STRUCTURE OF THE SUPERVISION.................................................................................245 by Tibor Parniczky SUPERVISION OF PRIVATE PENSIONS – AN AUSTRALIAN PERSPECTIVE........................255 by Keith Chapman POLISH MODEL SUPERVISION OF PENSION FUNDS........................................................261 by Pawel Pelc PART 5 – CONSUMER PROTECTION DISTRIBUTION AND PRIVATE PENSIONS: LESSONS FROM THE UNITED KINGDOM EXPERIENCE.............................................................................269 by Frank Fletcher and J. Michael Orszag DISCLOSURE TO MEMBERS: PRINCIPLES AND HUNGARIAN EXPERIENCES....................279 by Mihaly Erdos PENSIONS, CONSUMER FINANCIAL LITERACY AND PUBLIC EDUCATION: LESSONS FROM THE UNITED KINGDOM........................................................................289 by Edward Whitehouse ANNEX Summary Record of the INPRS Conference on Private Pensions...............315 6 PART 1 - DEVELOPMENT OF PRIVATE PENSION SYSTEMS IN SELECTED COUNTRIES 7 Experience and Trends in Occupational Pensions - Tour d’Horizon in OECD Countries by Chris Daykin Government Actuary United Kingdom 1. Introduction One of the most important elements of recent pension reform proposals internationally has been an increased role for funded complementary pension arrangements. They are needed to take some of the pressure off demands for maintaining PAYG social security schemes with unaffordable levels of benefit. They are also seen as creating new savings and investment which could play an important role in the development of the economy and perhaps even enhance the prospects for economic growth. However, economists are divided as to whether the expansion of funded complementary schemes will necessarily increase saving, or simply substitute for other savings. Additional monies for investment, moreover, will not automatically generate economic growth unless they are utilised productively. Otherwise they may simply force up prices in stock markets. Nevertheless, it is widely believed that increasing the level of funding will assist economic growth, particularly in emerging markets or markets in transition, if the introduction of complementary schemes is co-ordinated well with capital market development. The switch from pay-as-you-go to funded provision does not automatically solve the problems of demographic ageing. The resources needed to support a growing elderly population will still need to be generated by an economy with a declining number of people at working ages. Wealth can only be transferred to a limited extent over time by investing, although ownership of assets does create a claim on the future resources of the economy. It may well be that such a market mechanism will achieve the transfers of resources necessary to support the elderly more smoothly than direct transfer payments (tax or social security contributions). If the additional investment does increase the economic growth, the size of the economic “cake” to be divided up will be greater, and if so the transfer of resources to the elderly will be more affordable and perhaps easier to effect. 9

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