Pension

A pension (/ˈpɛnʃən/, from Latin pensiō, "payment") is a fund into which a sum of money is added during an employee's employment years, and from which payments are drawn to support the person's retirement from work in the form of periodic payments. A pension may be a "defined benefit plan" where a fixed sum is paid regularly to a person, or a "defined contribution plan" under which a fixed sum is invested and then becomes available at retirement age.[1] Pensions should not be confused with severance pay; the former is usually paid in regular installments for life after retirement, while the latter is typically paid as a fixed amount after involuntary termination of employment prior to retirement.

The terms "retirement plan" and "superannuation" tend to refer to a pension granted upon retirement of the individual.[2] Retirement plans may be set up by employers, insurance companies, the government or other institutions such as employer associations or trade unions. Called retirement plans in the United States, they are commonly known as pension schemes in the United Kingdom and Ireland and superannuation plans (or super[3]) in Australia and New Zealand. Retirement pensions are typically in the form of a guaranteed life annuity, thus insuring against the risk of longevity.

A pension created by an employer for the benefit of an employee is commonly referred to as an occupational or employer pension. Labor unions, the government, or other organizations may also fund pensions. Occupational pensions are a form of deferred compensation, usually advantageous to employee and employer for tax reasons. Many pensions also contain an additional insurance aspect, since they often will pay benefits to survivors or disabled beneficiaries. Other vehicles (certain lottery payouts, for example, or an annuity) may provide a similar stream of payments.

The common use of the term pension is to describe the payments a person receives upon retirement, usually under pre-determined legal or contractual terms. A recipient of a retirement pension is known as a pensioner or retiree.

Types of pensions

Employment-based pensions

A retirement plan is an arrangement to provide people with an income during retirement when they are no longer earning a steady income from employment. Often retirement plans require both the employer and employee to contribute money to a fund during their employment in order to receive defined benefits upon retirement. It is a tax deferred savings vehicle that allows for the tax-free accumulation of a fund for later use as a retirement income. Funding can be provided in other ways, such as from labor unions, government agencies, or self-funded schemes. Pension plans are therefore a form of "deferred compensation". A SSAS is a type of employment-based Pension in the UK.

Some countries also grant pensions to military veterans. Military pensions are overseen by the government; an example of a standing agency is the United States Department of Veterans Affairs. Ad hoc committees may also be formed to investigate specific tasks, such as the U.S. Commission on Veterans' Pensions (commonly known as the "Bradley Commission") in 1955–56. Pensions may extend past the death of the veteran himself, continuing to be paid to the widow.

Social and state pensions

Many countries have created funds for their citizens and residents to provide income when they retire (or in some cases become disabled). Typically this requires payments throughout the citizen's working life in order to qualify for benefits later on. A basic state pension is a "contribution based" benefit, and depends on an individual's contribution history. For examples, see National Insurance in the UK, or Social Security in the United States of America.

Many countries have also put in place a "social pension". These are regular, tax-funded non-contributory cash transfers paid to older people. Over 80 countries have social pensions.[4] Some are universal benefits, given to all older people regardless of income, assets or employment record. Examples of universal pensions include New Zealand Superannuation[5] and the Basic Retirement Pension of Mauritius.[6] Most social pensions, though, are means-tested, such as Supplemental Security Income in the United States of America or the "older person's grant" in South Africa.[7]

Disability pensions

Some pension plans will provide for members in the event they suffer a disability. This may take the form of early entry into a retirement plan for a disabled member below the normal retirement age.

Benefits

Retirement plans may be classified as defined benefit or defined contribution according to how the benefits are determined.[8] A defined benefit plan guarantees a certain payout at retirement, according to a fixed formula which usually depends on the member's salary and the number of years' membership in the plan. A defined contribution plan will provide a payout at retirement that is dependent upon the amount of money contributed and the performance of the investment vehicles utilized. Hence, with a defined contribution plan the risk and responsibility lies with the employee that the funding will be sufficient through retirement, whereas with the defined benefit plan the risk and responsibility lies with the employer or plan managers.

Some types of retirement plans, such as cash balance plans, combine features of both defined benefit and defined contribution plans. They are often referred to as hybrid plans. Such plan designs have become increasingly popular in the US since the 1990s. Examples include Cash Balance and Pension Equity plans.

Defined benefit plans

A traditional defined benefit (DB) plan is a plan in which the benefit on retirement is determined by a set formula, rather than depending on investment returns. Government pensions such as Social Security in the United States are a type of defined benefit pension plan. Traditionally, defined benefit plans for employers have been administered by institutions which exist specifically for that purpose, by large businesses, or, for government workers, by the government itself. A traditional form of defined benefit plan is the final salary plan, under which the pension paid is equal to the number of years worked, multiplied by the member's salary at retirement, multiplied by a factor known as the accrual rate. The final accrued amount is available as a monthly pension or a lump sum, but usually monthly.

The benefit in a defined benefit pension plan is determined by a formula that can incorporate the employee's pay, years of employment, age at retirement, and other factors. A simple example is a Dollars Times Service plan design that provides a certain amount per month based on the time an employee works for a company. For example, a plan offering $100 a month per year of service would provide $3,000 per month to a retiree with 30 years of service. While this type of plan is popular among unionized workers, Final Average Pay (FAP) remains the most common type of defined benefit plan offered in the United States. In FAP plans, the average salary over the final years of an employee's career determines the benefit amount.

Averaging salary over a number of years means that the calculation is averaging different dollars. For example, if salary is averaged over five years, and retirement is in 2009, then salary in 2004 dollars is averaged with salary in 2005 dollars, etc., with 2004 dollars being worth more than the dollars of succeeding years. The pension is then paid in first year of retirement dollars, in this example 2009 dollars, with the lowest value of any dollars in the calculation. Thus inflation in the salary averaging years has a considerable impact on purchasing power and cost, both being reduced equally by inflation

This effect of inflation can be eliminated by converting salaries in the averaging years to first year of retirement dollars, and then averaging.

In the US, 26 U.S.C. § 414(j) specifies a defined benefit plan to be any pension plan that is not a defined contribution plan (see below) where a defined contribution plan is any plan with individual accounts. A traditional pension plan that defines a benefit for an employee upon that employee's retirement is a defined benefit plan. In the U.S., corporate defined benefit plans, along with many other types of defined benefit plans, are governed by the Employee Retirement Income Security Act of 1974 (ERISA).[9]

In the United Kingdom, benefits are typically indexed for inflation (known as Retail Prices Index (RPI)) as required by law for registered pension plans.[10] Inflation during an employee's retirement affects the purchasing power of the pension; the higher the inflation rate, the lower the purchasing power of a fixed annual pension. This effect can be mitigated by providing annual increases to the pension at the rate of inflation (usually capped, for instance at 5% in any given year). This method is advantageous for the employee since it stabilizes the purchasing power of pensions to some extent.

If the pension plan allows for early retirement, payments are often reduced to recognize that the retirees will receive the payouts for longer periods of time. In the United States, under the Employee Retirement Income Security Act of 1974, any reduction factor less than or equal to the actuarial early retirement reduction factor is acceptable.[11]

Many DB plans include early retirement provisions to encourage employees to retire early, before the attainment of normal retirement age (usually age 65). Companies would rather hire younger employees at lower wages. Some of those provisions come in the form of additional temporary or supplemental benefits, which are payable to a certain age, usually before attaining normal retirement age.[12]

Funding

Defined benefit plans may be either funded or unfunded.

In an unfunded defined benefit pension, no assets are set aside and the benefits are paid for by the employer or other pension sponsor as and when they are paid. Pension arrangements provided by the state in most countries in the world are unfunded, with benefits paid directly from current workers' contributions and taxes. This method of financing is known as pay-as-you-go.[13] The social security systems of many European countries are unfunded,[14] having benefits paid directly out of current taxes and social security contributions, although several countries have hybrid systems which are partially funded. Spain set up the Social Security Reserve Fund and France set up the Pensions Reserve Fund; in Canada the wage-based retirement plan (CPP) is partially funded, with assets managed by the CPP Investment Board while the U.S. Social Security system is partially funded by investment in special U.S. Treasury Bonds.

In a funded plan, contributions from the employer, and sometimes also from plan members, are invested in a fund towards meeting the benefits. All plans must be funded in some way, even if they are pay-as-you-go, so this type of plan is more accurately known as pre-funded. The future returns on the investments, and the future benefits to be paid, are not known in advance, so there is no guarantee that a given level of contributions will be enough to meet the benefits. Typically, the contributions to be paid are regularly reviewed in a valuation of the plan's assets and liabilities, carried out by an actuary to ensure that the pension fund will meet future payment obligations. This means that in a defined benefit pension, investment risk and investment rewards are typically assumed by the sponsor/employer and not by the individual. If a plan is not well-funded, the plan sponsor may not have the financial resources to continue funding the plan.

Criticisms

Traditional defined benefit plan designs (because of their typically flat accrual rate and the decreasing time for interest discounting as people get closer to retirement age) tend to exhibit a J-shaped accrual pattern of benefits, where the present value of benefits grows quite slowly early in an employee's career and accelerates significantly in mid-career: in other words it costs more to fund the pension for older employees than for younger ones (an "age bias"). Defined benefit pensions tend to be less portable than defined contribution plans, even if the plan allows a lump sum cash benefit at termination. Most plans, however, pay their benefits as an annuity, so retirees do not bear the risk of low investment returns on contributions or of outliving their retirement income. The open-ended nature of these risks to the employer is the reason given by many employers for switching from defined benefit to defined contribution plans over recent years. The risks to the employer can sometimes be mitigated by discretionary elements in the benefit structure, for instance in the rate of increase granted on accrued pensions, both before and after retirement.

The age bias, reduced portability and open ended risk make defined benefit plans better suited to large employers with less mobile workforces, such as the public sector (which has open-ended support from taxpayers). This coupled with a lack of foresight on the employers part means a large proportion of the workforce are kept in the dark over future investment schemes.

Defined benefit plans are sometimes criticized as being paternalistic as they enable employers or plan trustees to make decisions about the type of benefits and family structures and lifestyles of their employees. However they are typically more valuable than defined contribution plans in most circumstances and for most employees (mainly because the employer tends to pay higher contributions than under defined contribution plans), so such criticism is rarely harsh.

The "cost" of a defined benefit plan is not easily calculated, and requires an actuary or actuarial software. However, even with the best of tools, the cost of a defined benefit plan will always be an estimate based on economic and financial assumptions. These assumptions include the average retirement age and lifespan of the employees, the returns to be earned by the pension plan's investments and any additional taxes or levies, such as those required by the Pension Benefit Guaranty Corporation in the U.S. So, for this arrangement, the benefit is relatively secure but the contribution is uncertain even when estimated by a professional. This has serious cost considerations and risks for the employer offering a pension plan.

One of the growing concerns with defined benefit plans is that the level of future obligations will outpace the value of assets held by the plan. This "underfunding" dilemma can be faced by any type of defined benefit plan, private or public, but it is most acute in governmental and other public plans where political pressures and less rigorous accounting standards can result in excessive commitments to employees and retirees, but inadequate contributions. Many states and municipalities across the United States of America and Canada now face chronic pension crises.[1][15][16]

Examples

Many countries offer state-sponsored retirement benefits, beyond those provided by employers, which are funded by payroll or other taxes. In the United States, the Social Security system is similar in function to a defined benefit pension arrangement, albeit one that is constructed differently from a pension offered by a private employer; however, Social Security is distinct in that there is no legally guaranteed level of benefits derived from the amount paid into the program.

Individuals that have worked in the UK and have paid certain levels of national insurance deductions can expect an income from the state pension scheme after their normal retirement. The state pension is currently divided into two parts: the basic state pension, State Second [tier] Pension scheme called S2P. Individuals will qualify for the basic state pension if they have completed sufficient years contribution to their national insurance record. The S2P pension scheme is earnings related and depends on earnings in each year as to how much an individual can expect to receive. It is possible for an individual to forgo the S2P payment from the state, in lieu of a payment made to an appropriate pension scheme of their choice, during their working life. For more details see UK pension provision.

Defined contribution plans

In a defined contribution plan, contributions are paid into an individual account for each member. The contributions are invested, for example in the stock market, and the returns on the investment (which may be positive or negative) are credited to the individual's account. On retirement, the member's account is used to provide retirement benefits, sometimes through the purchase of an annuity which then provides a regular income. Defined contribution plans have become widespread all over the world in recent years, and are now the dominant form of plan in the private sector in many countries. For example, the number of defined benefit plans in the US has been steadily declining, as more and more employers see pension contributions as a large expense avoidable by disbanding the defined benefit plan and instead offering a defined contribution plan.

Money contributed can either be from employee salary deferral or from employer contributions. The portability of defined contribution pensions is legally no different from the portability of defined benefit plans. However, because of the cost of administration and ease of determining the plan sponsor's liability for defined contribution plans (you do not need to pay an actuary to calculate the lump sum equivalent that you do for defined benefit plans) in practice, defined contribution plans have become generally portable.

In a defined contribution plan, investment risk and investment rewards are assumed by each individual/employee/retiree and not by the sponsor/employer, and these risks may be substantial.[17] In addition, participants do not necessarily purchase annuities with their savings upon retirement, and bear the risk of outliving their assets. (In the United Kingdom, for instance, it is a legal requirement to use the bulk of the fund to purchase an annuity.)

The "cost" of a defined contribution plan is readily calculated, but the benefit from a defined contribution plan depends upon the account balance at the time an employee is looking to use the assets. So, for this arrangement, the contribution is known but the benefit is unknown (until calculated).

Despite the fact that the participant in a defined contribution plan typically has control over investment decisions, the plan sponsor retains a significant degree of fiduciary responsibility over investment of plan assets, including the selection of investment options and administrative providers.

A defined contribution plan typically involves a number of service providers, including in many cases:

  • Trustee
  • Custodian
  • Administrator
  • Recordkeeper
  • Auditor
  • Legal counsel[18]

Examples

In the United States, the legal definition of a defined contribution plan is a plan providing for an individual account for each participant, and for benefits based solely on the amount contributed to the account, plus or minus income, gains, expenses and losses allocated to the account (see 26 U.S.C. § 414(i)). Examples of defined contribution plans in the United States include individual retirement accounts (IRAs) and 401(k) plans. In such plans, the employee is responsible, to one degree or another, for selecting the types of investments toward which the funds in the retirement plan are allocated. This may range from choosing one of a small number of pre-determined mutual funds to selecting individual stocks or other securities. Most self-directed retirement plans are characterized by certain tax advantages, and some provide for a portion of the employee's contributions to be matched by the employer. In exchange, the funds in such plans may not be withdrawn by the investor prior to reaching a certain age—typically the year the employee reaches 59.5 years old-- (with a small number of exceptions) without incurring a substantial penalty.

In the US, defined contribution plans are subject to IRS limits on how much can be contributed, known as the section 415 limit. In 2009, the total deferral amount, including employee contribution plus employer contribution, was limited to $49,000 or 100% of compensation, whichever is less. The employee-only limit in 2009 was $16,500 with a $5,500 catch-up. These numbers usually increase each year and are indexed to compensate for the effects of inflation. For 2015, the limits were raised to $53,000 and $18,000,[19] respectively.

Examples of defined contribution pension schemes in other countries are, the UK's personal pensions and proposed National Employment Savings Trust (NEST), Germany's Riester plans, Australia's Superannuation system and New Zealand's KiwiSaver scheme. Individual pension savings plans also exist in Austria, Czech Republic, Denmark, Greece, Finland, Ireland, Netherlands, Slovenia and Spain[20]

Hybrid and cash balance plans

Hybrid plan designs combine the features of defined benefit and defined contribution plan designs.

A cash balance plan is a defined benefit plan made to appear as if it were a defined contribution plan. They have notional balances in hypothetical accounts where, typically, each year the plan administrator will contribute an amount equal to a certain percentage of each participant's salary; a second contribution, called interest credit, is made as well. These are not actual contributions and further discussion is beyond the scope of this entry suffice it to say that there is currently much controversy. In general, they are usually treated as defined benefit plans for tax, accounting and regulatory purposes. As with defined benefit plans, investment risk in hybrid designs is largely borne by the plan sponsor. As with defined contribution designs, plan benefits are expressed in the terms of a notional account balance, and are usually paid as cash balances upon termination of employment. These features make them more portable than traditional defined benefit plans and perhaps more attractive to a more highly mobile workforce.

Target benefit plans are defined contribution plans made to match (or resemble) defined benefit plans.

Contrasting types of retirement plans

Advocates of defined contribution plans point out that each employee has the ability to tailor the investment portfolio to his or her individual needs and financial situation, including the choice of how much to contribute, if anything at all. However, others state that these apparent advantages could also hinder some workers who might not possess the financial savvy to choose the correct investment vehicles or have the discipline to voluntarily contribute money to retirement accounts. This debate parallels the discussion currently going on in the U.S., where many Republican leaders favor transforming the Social Security system, at least in part, to a self-directed investment plan.

Financing

Defined contribution pensions, by definition, are funded, as the "guarantee" made to employees is that specified (defined) contributions will be made during an individual's working life.

There are many ways to finance a pension and save for retirement. Pension plans can be set up by an employer, matching a monetary contribution each month, by the state or personally through a pension scheme with a financial institution, such as a bank or brokerage firm. Pension plans often come with a tax break depending on the country and plan type.

For example, Canadians have the option to open a Registered Retirement Savings Plan (RRSP), as well as a range of employee and state pension programs. This plan allows contributions to this account to be marked as un-taxable income and remain un-taxed until withdrawal. Most countries' governments will provide advice on pension schemes.

History

Widows' funds were among the first pension type arrangement to appear, for example Duke Ernest the Pious of Gotha in Germany, founded a widows' fund for clergy in 1645 and another for teachers in 1662.[21] 'Various schemes of provision for ministers' widows were then established throughout Europe at about the start of the eighteenth century, some based on a single premium others based on yearly premiums to be distributed as benefits in the same year.'[22]

Germany

As part of Otto von Bismarck's social legislation, the Old Age and Disability Insurance Bill in 1889.[23] The Old Age Pension program, financed by a tax on workers, was originally designed to provide a pension annuity for workers who reached the age of 70 years, though this was lowered to 65 years in 1916. It is sometimes claimed that at the time life expectancy for the average Prussian was 45 years; in fact this figure is due to the very high infant mortality and high maternal death rate from childbirth of this era. In fact, an adult entering into insurance under the scheme would on average live to 70 years of age, a figure used in the actuarial assumptions included in the legislation.

Ireland

There is a history of pensions in Ireland that can be traced back to Brehon Law imposing a legal responsibility on the kin group to take care of its members who were aged, blind, deaf, sick or insane.[24] For a discussion on pension funds and early Irish law, see F Kelly, A Guide to Early Irish Law (Dublin, Dublin Institute for Advanced Studies, 1988). In 2010, there were over 76,291 pension schemes operating in Ireland.[25]

Today the Republic of Ireland has a two-tiered approach to the provision of pensions or retirement benefits. First, there is a state social welfare retirement pension, which promises a basic level of pension. This is a flat rate pension, funded by the national social insurance system and is termed Pay Related Social Insurance or PRSI. Secondly, there are the occupational pension schemes and self-employed arrangements, which supplement the state pension.

United Kingdom

Leeds public sector pensions strike in November 2011 14
Public sector workers in Leeds striking over pension changes by the government in November 2011

Until the 20th century, poverty was seen as a quasi-criminal state, and this was reflected in the Vagabonds and Beggars Act 1495 that imprisoned beggars. During Elizabethan and Victorian times, English poor laws represented a shift whereby the poor were seen merely as morally degenerate, and were expected to perform forced labour in workhouses.

The beginning of the modern state pension was the Old Age Pensions Act 1908, that provided 5 shillings (£0.25) a week for those over 70 whose annual means do not exceed £31.50. It coincided with the Royal Commission on the Poor Laws and Relief of Distress 1905-09 and was the first step in the Liberal welfare reforms to the completion of a system of social security, with unemployment and health insurance through the National Insurance Act 1911.

After the Second World War, the National Insurance Act 1946 completed universal coverage of social security. The National Assistance Act 1948 formally abolished the poor law, and gave a minimum income to those not paying national insurance.

The early 1990s established the existing framework for state pensions in the Social Security Contributions and Benefits Act 1992 and Superannuation and other Funds (Validation) Act 1992. Following the highly respected Goode Report, occupational pensions were covered by comprehensive statutes in the Pension Schemes Act 1993 and the Pensions Act 1995.

In 2002 the Pensions Commission was established as a cross party body to review pensions in the United Kingdom. The first Act to follow was the Pensions Act 2004 that updated regulation by replacing OPRA with the Pensions Regulator and relaxing the stringency of minimum funding requirements for pensions, while ensuring protection for insolvent businesses. In a major update of the state pension, the Pensions Act 2007, which aligned and raised retirement ages. Following that, the Pensions Act 2008 has set up automatic enrolment for occupational pensions, and a public competitor designed to be a low-cost and efficient fund manager, called the National Employment Savings Trust (or "Nest").

United States

Public pensions got their start with various 'promises', informal and legislated, made to veterans of the Revolutionary War and, more extensively, the Civil War. They were expanded greatly, and began to be offered by a number of state and local governments during the early Progressive Era in the late nineteenth century.

Federal civilian pensions were offered under the Civil Service Retirement System (CSRS), formed in 1920. CSRS provided retirement, disability and survivor benefits for most civilian employees in the US Federal government, until the creation of a new Federal agency, the Federal Employees Retirement System (FERS), in 1987.

Pension plans became popular in the United States during World War II, when wage freezes prohibited outright increases in workers' pay. The defined benefit plan had been the most popular and common type of retirement plan in the United States through the 1980s; since that time, defined contribution plans have become the more common type of retirement plan in the United States and many other western countries.

In April 2012, the Northern Mariana Islands Retirement Fund filed for Chapter 11 bankruptcy protection. The retirement fund is a defined benefit type pension plan and was only partially funded by the government, with only $268.4 million in assets and $911 million in liabilities. The plan experienced low investment returns and a benefit structure that had been increased without raises in funding.[26] According to Pensions and Investments, this is "apparently the first" US public pension plan to declare bankruptcy.[26]

Current challenges

A growing challenge for many nations is population ageing. As birth rates drop and life expectancy increases an ever-larger portion of the population is elderly. This leaves fewer workers for each retired person. In many developed countries this means that government and public sector pensions could potentially be a drag on their economies unless pension systems are reformed or taxes are increased. One method of reforming the pension system is to increase the retirement age. Two exceptions are Australia and Canada, where the pension system is forecast to be solvent for the foreseeable future. In Canada, for instance, the annual payments were increased by some 70% in 1998 to achieve this. These two nations also have an advantage from their relative openness to immigration: immigrants tend to be of working age. However, their populations are not growing as fast as the U.S., which supplements a high immigration rate with one of the highest birthrates among Western countries. Thus, the population in the U.S. is not ageing to the extent as those in Europe, Australia, or Canada.

Another growing challenge is the recent trend of states and businesses in the United States purposely under-funding their pension schemes in order to push the costs onto the federal government. For example, in 2009, the majority of states have unfunded pension liabilities exceeding all reported state debt. Bradley Belt, former executive director of the PBGC (the Pension Benefit Guaranty Corporation, the federal agency that insures private-sector defined-benefit pension plans in the event of bankruptcy), testified before a Congressional hearing in October 2004, "I am particularly concerned with the temptation, and indeed, growing tendency, to use the pension insurance fund as a means to obtain an interest-free and risk-free loan to enable companies to restructure. Unfortunately, the current calculation appears to be that shifting pension liabilities onto other premium payers or potentially taxpayers is the path of least resistance rather than a last resort."

Challenges have further been increased by the post-2007 credit crunch. Total funding of the nation's 100 largest corporate pension plans fell by $303bn in 2008, going from a $86bn surplus at the end of 2007 to a $217bn deficit at the end of 2008.[27]

Pension systems by country

Pension systems by country:[28][29]

Country Pillar 0 Pillar 1 Pillar 2 Pillar 3
Afghanistan Afghanistan No Green tick Social insurance system N/A N/A
Algeria Algeria Green tick Social assistance Green tick Social insurance system N/A N/A
Argentina Argentina Green tick Basic pension Green tick Social insurance system No, closed in 2008 N/A
Armenia Armenia Green tick Social assistance Green tick Social insurance system Green tick Mandatory individual accounts Green tick Voluntary pensions
Australia Australia Green tick Social assistance Green tick Mandatory occupational pension system N/A N/A
Austria Austria No Green tick Social insurance system Green tick Occupational pensions Green tick Private pensions
Bahrain Bahrain No Green tick Social insurance system N/A N/A
Bangladesh Bangladesh Green tick Social assistance N/A N/A N/A
Belarus Belarus Green tick Social assistance Green tick Social insurance system N/A N/A
Bhutan Bhutan No Green tick Provident fund system No N/A
Belgium Belgium Green tick Social assistance Green tick Social insurance system N/A N/A
Botswana Botswana Green tick Basic pension No No N/A
Brazil Brazil Green tick Social assistance Green tick Social insurance system N/A N/A
Brunei Brunei Green tick Basic pension Green tick Provident fund system Green tick Supplementary individual account N/A
Bulgaria Bulgaria Green tick Social assistance Green tick Social insurance system Green tick Individual accounts N/A
Burkina Faso Burkina Faso No Green tick Social insurance system N/A N/A
Burundi Burundi No Green tick Social insurance system N/A N/A
Cameroon Cameroon No Green tick Social insurance system N/A N/A
Canada Canada Green tick Basic pension Green tick Canada Pension Plan N/A Green tick Registered Retirement Savings Plan
China People's Republic of China Green tick Social assistance Green tick Social insurance system Green tick Mandatory individual accounts N/A
Dominican Republic Dominican Republic Green tick Social assistance Green tick Mandatory individual accounts N/A N/A
El Salvador El Salvador Green tick Social assistance Green tick Mandatory individual accounts N/A N/A
Estonia Estonia Green tick Social assistance Green tick Social insurance system Green tick Mandatory individual accounts Green tick Voluntary individual accounts
France France Green tick Social assistance Green tick Social insurance system Green tick Mandatory occupational pension provision Green tick
  • Voluntary private collective pension provision
  • Voluntary private individual pension provision
Georgia (country) Georgia Green tick Basic pension N/A N/A N/A
Germany Germany Green tick Social assistance Green tick Social insurance system Green tick Voluntary occupational pension insurance Green tick Private pension schemes
Hong Kong Hong Kong Green tick Basic pension Green tick Provident fund system N/A N/A
Italy Italy Green tick Social assistance Green tick Notional Defined Contributions N/A N/A
Japan Japan N/A N/A N/A N/A
Jordan Jordan No Green tick Social insurance system N/A N/A
Kazakhstan Kazakhstan Green tick Basic pension Green tick Mandatory individual accounts N/A N/A
Kenya Kenya Green tick Older Persons Cash Transfer Green tick Mandatory individual accounts No N/A
Kyrgyzstan Kyrgyzstan Green tick Social assistance Green tick Notional Defined Contributions No N/A
Latvia Latvia Green tick Social assistance Green tick Notional Defined Contributions Green tick Mandatory individual accounts Green tick Voluntary individual accounts
Lithuania Lithuania Green tick Social assistance Green tick Social insurance system Green tick Voluntary pension fund Green tick Voluntary individual accounts
Luxembourg Luxembourg No Green tick Social insurance system N/A N/A
Malawi Malawi no Green tick Mandatory individual accounts N/A N/A
Mexico Mexico Green tick Social assistance Green tick Mandatory individual accounts N/A N/A
Monaco Monaco No Green tick Social insurance system No N/A
Mongolia Mongolia Green tick Social assistance Green tick Notional Defined Contributions N/A N/A
Morocco Morocco No Green tick Social insurance system N/A N/A
Mozambique Mozambique Green tick Social assistance Green tick Social insurance system N/A N/A
Namibia Namibia Green tick Social assistance Green tick Social insurance system N/A N/A
Nepal Nepal Green tick Social assistance Green tick Provident fund system N/A N/A
Netherlands Netherlands Green tick Social assistance Green tick Social insurance system Green tick Private employee pensions Green tick Individual private pensions
New Zealand New Zealand Green tick Basic pension N/A N/A N/A
Nigeria Nigeria No Green tick Mandatory individual accounts No N/A
North Korea North Korea N/A N/A N/A N/A
Norway Norway Green tick Basic pension Green tick Notional Defined Contributions Green tick Occupational pension schemes Green tick Individual pensions
Oman Oman No Green tick Social insurance system N/A N/A
Pakistan Pakistan No Green tick Social insurance system N/A N/A
Papua New Guinea Papua New Guinea No Green tick Mandatory occupational retirement system N/A N/A
Philippines Philippines Green tick Social assistance Green tick Social insurance system N/A N/A
Poland Poland Basic pensions for mothers of four or more children from March 2019 Green tick Notional Defined Contributions Green tick Voluntary Open Pension Funds (OFE) Green tick Voluntary individual accounts:
  • Occupational Pension Programs (PPE)
  • Individual Pension Accounts (IKE/IKZE)
  • Employee Capital Plans (PPK)
Portugal Portugal Green tick Social assistance Green tick Social insurance system N/A N/A
Qatar Qatar No Green tick Social insurance system N/A N/A
Romania Romania No Green tick Social insurance system Green tick Mandatory individual accounts Green tick Voluntary individual accounts
Russia Russia Green tick Basic pension Green tick Social insurance system Green tick Mandatory pension funds Green tick Voluntary private pension funds
Rwanda Rwanda No Green tick Social insurance system N/A N/A
Saudi Arabia Saudi Arabia No Green tick Social insurance system N/A N/A
Senegal Senegal No Green tick Social insurance system N/A N/A
Sierra Leone Sierra Leone No Green tick Social insurance system N/A N/A
Singapore Singapore Green tick Social assistance Green tick Provident fund system N/A N/A
Slovakia Slovakia Green tick Basic pension Green tick Social insurance system Green tick Voluntary individual accounts N/A
Slovenia Slovenia Green tick Social assistance Green tick Social insurance system N/A N/A
Solomon Islands Solomon Islands No Green tick Provident fund system N/A N/A
South Africa South Africa Green tick Basic pension N/A N/A N/A
South Korea South Korea Green tick Social assistance Green tick Social insurance system N/A N/A
South Sudan South Sudan No No No N/A
Spain Spain Green tick Social assistance Green tick Social insurance system N/A N/A
Sri Lanka Sri Lanka No Green tick Provident fund system Green tick Supplementary fund N/A
Eswatini Swaziland Green tick Social assistance Green tick Provident fund system N/A N/A
Sweden Sweden Green tick Basic pension Green tick Notional Defined Contributions Green tick Mandatory individual accounts N/A
Switzerland Switzerland N/A Green tick Social insurance system Green tick Mandatory occupational pension system Green tick Voluntary pensions funds and endowment policy insurances with tax benefits
Sudan Sudan No Green tick Social insurance system N/A N/A
Syria Syria N/A N/A N/A N/A
Taiwan Taiwan Green tick Social assistance Green tick Social insurance system Green tick Mandatory individual accounts N/A
Tanzania Tanzania No Green tick Social insurance system N/A N/A
Thailand Thailand Green tick Social assistance Green tick Social insurance system Green tick Voluntary national savings fund N/A
Turkey Turkey Green tick Social assistance Green tick Social insurance system N/A N/A
Turkmenistan Turkmenistan Green tick Social assistance Green tick Notional Defined Contributions N/A N/A
Uganda Uganda No Green tick Provident fund system N/A N/A
Ukraine Ukraine Green tick Social assistance Green tick Social insurance system Green tick Mandatory state pension fund Green tick Voluntary individual pensions
United Arab Emirates United Arab Emirates No Green tick Social insurance system N/A N/A
United Kingdom United Kingdom Green tick Basic pension Green tick Social insurance system Green tick Occupational schemes Green tick Voluntary individual pensions:
  • Stakeholder pensions
  • Group personal pensions
  • Self-invested personal pensions
United States United States Green tick Social assistance Green tick Social insurance system N/A N/A
Uruguay Uruguay Green tick Social assistance Green tick Social insurance system Green tick Mandatory individual accounts N/A
Uzbekistan Uzbekistan Green tick Social assistance Green tick Mandatory individual accounts N/A N/A
Venezuela Venezuela Green tick Social assistance Green tick Social insurance system N/A N/A
Vietnam Vietnam Green tick Social assistance Green tick Social insurance system N/A N/A
Zambia Zambia No Green tick Social insurance system N/A N/A
Zimbabwe Zimbabwe No Green tick Social insurance system N/A N/A

Notable examples of pension systems by country

Some of the listed systems might also be considered social insurance.

See also

Specific:

References

  1. ^ a b Thomas P. Lemke, Gerald T. Lins (2010). ERISA for Money Managers. Thomson Reuters. ISBN 9780314627056. Retrieved 11 October 2015.
  2. ^ "WordNet Search - 3.1". princeton.edu.
  3. ^ "Industry SuperFunds - Home". industrysuper.com. Retrieved 2010-09-17.
  4. ^ "Country map". pension-watch.net.
  5. ^ webcoordinator@msd.govt.nz. "New Zealand Superannuation". workandincome.govt.nz.
  6. ^ Willmore, Larry (April 2003). "Universal Pensions in Mauritius". SSRN 398280. Missing or empty |url= (help)
  7. ^ "Old age pension". GCIS. Retrieved 7 April 2013.
  8. ^ "Private Pensions/Les pensions privées" (PDF). Retrieved 2010-09-17.
  9. ^ Lemke and Lins, ERISA for Money Managers, §1:2 (Thomson West, 2013 ed.).
  10. ^ "The Pensions Advisory Service". The Pensions Advisory Service. Retrieved 2010-09-17.
  11. ^ Foster, Ann C. "Early Retirement Provisions in Defined Benefit Pension Plans" (PDF). bls.gov.
  12. ^ Shulman, Gary A. (1999). Qualified Domestic Relations Order Handbook. Aspen Publishers Online. pp. 199–200. ISBN 978-0-7355-0665-7.
  13. ^ "Unfunded Pension Plans". OECD Glossary of Statistical Terms. Retrieved 26 January 2009.
  14. ^ "Falling Short" The Economist April 7, 2011. Retrieved 30 September 2012.
  15. ^ Tufts, William; Fairbanks, Lee (2011), Pension Ponzi: How Public-sector Unions are Bankrupting Canada's Health Care, Education and Your Retirement, Mississauga, Ontario: Wiley, p. 210, ISBN 978-1118098738
  16. ^ Walsh, Mary (14 April 2018). "A $76,000 Monthly Pension: Why States and Cities Are Short on Cash". New York Times. Retrieved 1 May 2018. Oregon — like many other states and cities, including New Jersey, Kentucky and Connecticut — is caught in a fiscal squeeze of its own making. Its economy is growing, but the cost of its state-run pension system is growing faster.
  17. ^ Cannon, Edmund; Ian Tonks (2012). "The Value and Risk of Defined Contribution Pension Schemes: International Evidence". Journal of Risk and Insurance. 80: 95–119. doi:10.1111/j.1539-6975.2011.01456.x. hdl:10036/86956.
  18. ^ Lemke and Lins, ERISA for Money Managers §2:26 (Thomson West, 2013 ed.).
  19. ^ IRS Announces 2015 Pension Plan Limitations; Taxpayers May Contribute up to $18,000 to their 401(k) plans in 2015
  20. ^ Economic Policy Committee and the European Commission (2006). The impact of ageing on public expenditure. EU.
  21. ^ Haberman, Steven (1995). History of Actuarial Science, vol. 1. London: William Pickering. pp. xlviii. ISBN 978-1-85196-160-3. OCLC 468359649.
  22. ^ Hald, A. (1990). A History of Probability and Statistics and Their Applications Before 1750. John Wiley and Sons. ISBN 978-0-471-50230-2. OCLC 19629739.
  23. ^ Gianasso, Alexandre. "A Brief History of Pensions". Davidson Asset Management. Retrieved 29 June 2015.
  24. ^ Lynn, Theodore G.; Clarke, Blanaid J. (19 August 2010). "The Irish Corporate Governance System". doi:10.2139/ssrn.1661617. SSRN 1661617.
  25. ^ "The Pensions Board Annual Report". pensionsboard.ie. 2010. Archived from the original on 5 January 2012. Retrieved 15 December 2011.
  26. ^ a b Mercado, Darla (2012-04-19). "In apparent first, a public pension plan files for bankruptcy". Pensions and Investments. Retrieved 2012-04-28.
  27. ^ "Largest U.S. pension plans assets fall $217 billion short". USA Today, citing a report by Watson Wyatt. 10 March 2009.
  28. ^ Social Security Programs Throughout the World
  29. ^ Pension Watch

External links

Atal Pension Yojana

Atal Pension Yojana (previously known as Swavalamban Yojana) is a government-backed pension scheme in India targeted at the unorganised sector. It was mentioned in the 2015 Budget speech by Finance Minister Arun Jaitley. It was launched by Prime Minister Narendra Modi on 9 May in Kolkata. As of May 2015, only 20% of India's population has any kind of pension scheme, this scheme aims to increase the number.

CPP Investment Board

The CPP Investment Board (French: L'office d'investissement du RPC), officially the Canada Pension Plan Investment Board, is a Canadian Crown corporation established by way of the 1997 Canada Pension Plan Investment Board Act, to oversee and invest the funds contributed to and held by the Canada Pension Plan (CPP). As of December 31, 2018, the CPP Investment Board manages over C$368 billion in investment assets for the Canada Pension Plan on behalf of 20 million Canadians. CPPIB is one of the world's largest sovereign wealth funds and one of the world's largest investors in private equity, having invested over US$28.1 billion between 2010 and 2014 alone.

Canada Pension Plan

The Canada Pension Plan (CPP; French: Régime de pensions du Canada) is a contributory, earnings-related social insurance program. It forms one of the two major components of Canada's public retirement income system, the other component being Old Age Security (OAS). Other parts of Canada's retirement system are private pensions, either employer-sponsored or from tax-deferred individual savings (known in Canada as a Registered Retirement Savings Plan). As of September 2017, the CPP Investment Board manages over C$328.2 billion in investment assets for the Canada Pension Plan on behalf of 20 million Canadians. CPPIB is one of the world's biggest pension funds.

Defined benefit pension plan

A defined benefit pension plan is a type of pension plan in which an employer/sponsor promises a specified pension payment, lump-sum (or combination thereof) on retirement that is predetermined by a formula based on the employee's earnings history, tenure of service and age, rather than depending directly on individual investment returns. Traditionally, many governmental and public entities, as well as a large number of corporations, provided defined benefit plans, sometimes as a means of compensating workers in lieu of increased pay.A defined benefit plan is 'defined' in the sense that the benefit formula is defined and known in advance. Conversely, for a "defined contribution retirement saving plan", the formula for computing the employer's and employee's contributions is defined and known in advance, but the benefit to be paid out is not known in advance.In the United States, 26 U.S.C. § 414(j) specifies a defined benefit plan to be any pension plan that is not a defined contribution plan, where a defined contribution plan is any plan with individual accounts. A traditional pension plan that defines a benefit for an employee upon that employee's retirement is a defined benefit plan.

The most common type of formula used is based on the employee's terminal earnings (final salary). Under this formula, benefits are based on a percentage of average earnings during a specified number of years at the end of a worker's career.

In the private sector, defined benefit plans are often funded exclusively by employer contributions. For very small companies with one owner and a handful of younger employees, the business owner generally receives a high percentage of the benefits. In the public sector, defined benefit plans usually require employee contributions.Over time, these plans may face deficits or surpluses between the money currently in their plans and the total amount of their pension obligations. Contributions may be made by the employee, the employer, or both. In many defined benefit plans the employer bears the investment risk and can benefit from surpluses.

Department for Work and Pensions

The Department for Work and Pensions (DWP) is the largest government department in the United Kingdom, and is responsible for welfare and pension policy.

The department has four operational organisations: Jobcentre Plus administers working age benefits such as Jobseeker's Allowance, and decides which claimants receive Employment and Support Allowance; the Pension Service which pays the Basic State Pension and Pension Credit and provides information on related issues; Disability and Carers Service which provides financial support to disabled people and their carers; and the Child Maintenance Group which provides the statutory Child Support Schemes, operating as the Child Support Agency and the Child Maintenance Service.

Employee Retirement Income Security Act of 1974

The Employee Retirement Income Security Act of 1974 (ERISA) (Pub.L. 93–406, 88 Stat. 829, enacted September 2, 1974, codified in part at 29 U.S.C. ch. 18) is a federal United States tax and labor law that establishes minimum standards for pension plans in private industry. It contains rules on the federal income tax effects of transactions associated with employee benefit plans. ERISA was enacted to protect the interests of employee benefit plan participants and their beneficiaries by:

Requiring the disclosure of financial and other information concerning the plan to beneficiaries;

Establishing standards of conduct for plan fiduciaries;

Providing for appropriate remedies and access to the federal courts.ERISA is sometimes used to refer to the full body of laws that regulate employee benefit plans, which are mainly in the Internal Revenue Code and ERISA itself.

Responsibility for interpretation and enforcement of ERISA is divided among the Department of Labor, the Department of the Treasury (particularly the Internal Revenue Service), and the Pension Benefit Guaranty Corporation.

Employees' Provident Fund Organisation

The Employees' Provident Fund Organisation (abbreviated to EPFO), is an organization tasked to assist the Central Board of Trustees, a statutory body formed by the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 and is under the administrative control of the Ministry of Labour and Employment, Government of India.EPFO assists the Central Board in administering a compulsory contributory Provident Fund Scheme, a Pension Scheme and an Insurance Scheme for the workforce engaged in the organized sector in India. It is also the nodal agency for implementing Bilateral Social Security Agreements with other countries on a reciprocal basis. The schemes cover Indian workers as well as International workers (for countries with which bilateral agreements have been signed. As of now 17 Social Security Agreements are operational). It is one of the largest social security organisations in India in terms of the number of covered beneficiaries and the volume of financial transactions undertaken. The EPFO's apex decision making body is the Central Board of Trustees (CBT).The total assets under management are more than ₹8.5 lakh crore (US$128 billion) as of 18 March 2016.On 1 October 2014, Prime Minister of India Narendra Modi launched Universal Account Number for Employees covered by EPFO to enable PF number portability.

Government Pension Fund of Norway

The Government Pension Fund of Norway comprises two entirely separate sovereign wealth funds owned by the government of Norway.

The Government Pension Fund Global, also known as the Oil Fund, was established in 1990 to invest the surplus revenues of the Norwegian petroleum sector. It has over US$1 trillion in assets, including 1.3% of global stocks and shares, making it the world’s largest sovereign wealth fund. In May 2018 it was worth about $195,000 per Norwegian citizen. It also holds portfolios of real estate and fixed-income investments. Many companies are excluded by the fund on ethical grounds.

The Government Pension Fund Norway is smaller and was established in 1967 as a type of national insurance fund. It is managed separately from the Oil Fund and is limited to domestic and Scandinavian investments and is therefore a key stock holder in many large Norwegian companies, predominantly via the Oslo Stock Exchange.

National Building Museum

The National Building Museum is located at 401 F Street NW in Washington, D.C., United States. It is a museum of "architecture, design, engineering, construction, and urban planning". It was created by an act of Congress in 1980, and is a private non-profit institution; it is adjacent to the National Law Enforcement Officers Memorial and the Judiciary Square Metro station. The museum hosts various temporary exhibits in galleries around the spacious Great Hall.

The building, completed in 1887, served as the Pension Building, housing the United States Pension Bureau, and hosted several presidential inaugural balls. It is an important early large-scale example of Renaissance Revival architecture, and was designated a National Historic Landmark in 1985.

National Pension System

The National Pension System (NPS) is a voluntary defined contribution pension system in India. National Pension System, like PPF and EPF is an EEE (Exempt-Exempt-Exempt) instrument in India where entire corpus escapes tax at maturity and entire pension withdrawal amount is tax-free.NPS started with the decision of the Government of India to stop defined benefit pensions for all its employees who joined after 1 January 2005. While the scheme was initially designed for government employees only, it was opened up for all citizens of India between the age of 18 and 60 in 2009. In its overall structure NPS is closer to 401(k) plans of the United States. Administered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA)(Based on the recommandations of Chakka Muni Balaji Ganesh Committee),in accordance with (Juturu Sahithi committee).On 10 December 2018, Government of India made NPS an entirely tax-free instrument in India where entire corpus escapes tax at maturity, the 40% annunity also became tax-free. The contribution under Tier-II of NPS is covered under Section 80C for deduction up to Rs. 1.50 lakh for income tax benefits, provided there is a lock-in period of three years. The changes in NPS will be notified through changes in The Income-tax Act, 1961, which is expected to happen through the Finance Bill in 2019 Union budget of India. NPS is limited EEE, to the extent of 60%. 40% has to be compulsorily used to purchase an annuity, which is taxable at the applicable tax slab.Contributions to NPS receive tax exemptions under Section 80C, Section 80CCC and Section 80CCD(1) of Income Tax Act. Starting from 2016, an additional tax benefit of Rs 50,000 under Section 80CCD(1b) is provided under NPS, which is over the Rs 1.5 lakh exemption of Section 80C. Private Fund managers are important parts of NPS. NPS is considered one of the best tax saving instruments, after 40% of the corpus was made tax-free at the time of maturity and it is ranked just below Equity-linked savings scheme(ELSS).

New York City Comptroller

The Office of Comptroller of New York City is the chief fiscal officer and chief auditing officer of the city. The comptroller is elected, citywide, to a four-year term and can hold office for two consecutive terms. The current comptroller is Democrat Scott Stringer, the former Borough President of Manhattan. Stringer was elected on November 5, 2013.

Ontario Teachers' Pension Plan

The Ontario Teachers' Pension Plan Board (Ontario Teachers'; French: Régime de retraite des enseignantes et des enseignants de l'Ontario or RREO) is an independent organization responsible for administering defined-benefit pensions for school teachers of the Canadian province of Ontario. Ontario Teachers' also invests the plan's pension fund, and is one of the world’s largest institutional investors. The plan is a multi-employer pension plan, jointly sponsored by the Government of Ontario and the Ontario Teachers' Federation.

Pension fund

A pension fund, also known as a superannuation fund in some countries, is any plan, fund, or scheme which provides retirement income.

Pension funds typically have large amounts of money to invest and are the major investors in listed and private companies. They are especially important to the stock market where large institutional investors dominate. The largest 300 pension funds collectively hold about $6 trillion in assets. In January 2008, The Economist reported that Morgan Stanley estimates that pension funds worldwide hold over US$20 trillion in assets, the largest for any category of investor ahead of mutual funds, insurance companies, currency reserves, sovereign wealth funds, hedge funds, or private equity.The Federal Old-age and Survivors Insurance Trust Fund is the world's largest public pension fund which oversees $2.72 trillion USD in assets.

Pensions in India

There are three major components to the Indian pension system: the civil servants pension, the mandatory

pension programs run by the Employees' Provident Fund Organisation of India, and the unorganised sector pension called the National Social Assistance Programme (NSAP).The State of Uttar Pradesh has implemented E-pension system which allows filling up of pension forms, checking, verification and payment using an online system.The National Pension System (NPS) is a voluntary defined contribution pension system administered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA), created by an Act of the Parliament of India. The NPS started with the decision of the Government of India to stop defined benefit pensions for all its employees who joined after 1 January 2004. While the scheme was initially designed for government employees only, it was opened up for all citizens of India in 2009. NPS is an attempt by the government to create a pensioned society in India.

Pensions in the United Kingdom

Pensions in the United Kingdom can be categorised into three major divisions and seven sub-divisions, covering both defined benefit and defined contribution pensions.:

State pensions

Basic State Pension

State Second Pension (S2P)

Occupational pensions

Defined benefit pension

Defined contribution pension

Individual/personal pensions

Stakeholder pensions

Group personal pensions

Self-invested personal pensionsPersonal accounts, automatic enrolment and the minimum employer contribution are new categories which joined these from 2012.Automatic enrolment has been successful, but there are a number of myths remaining around the scheme, which professional bodies and companies are working to eradicate.

The state provides basic pension provision intended to prevent poverty in old age. Until 2010 men over the age of 65 and women over the age of 60 were entitled to claim state pension; from April 2010 the age for women is gradually being harmonised to match that for men. Longer-term, the retirement age for both men and women will rise to 68 by no later than 2046 and possibly much earlier.

The basic state pension, then known as the "Old Age Pension" was introduced in the United Kingdom (which included all of Ireland at that time) in January 1909. A pension of 5 shillings per week (25p, equivalent, using the Consumer Price Index, to £26 in present-day terms), or 7s.6d per week (equivalent to £38 today) for a married couple, was payable to a person with an income below £21 per annum (equivalent to £2200 today), following the passage of the Old-Age Pensions Act 1908. The qualifying age was 70, and the pensions were subject to a means test.

Pensión de mujeres

Pensión de mujeres is a Mexican telenovela that aired on Telesistema Mexicano in 1960. It was the original story and adaptation of Raúl Astor. It had 43 episodes starring Amparo Rivelles.

Retirement

Retirement is the withdrawal from one's position or occupation or from one's active working life. A person may also semi-retire by reducing work hours.

An increasing number of individuals are choosing to put off this point of total retirement, by selecting to exist in the emerging state of pre-tirement.Many people choose to retire when they are eligible for private or public pension benefits, although some are forced to retire when bodily conditions no longer allow the person to work any longer (by illness or accident) or as a result of legislation concerning their position. In most countries, the idea of retirement is of recent origin, being introduced during the late 19th and early 20th centuries. Previously, low life expectancy and the absence of pension arrangements meant that most workers continued to work until death. Germany was the first country to introduce retirement benefits in 1889.Nowadays, most developed countries have systems to provide pensions on retirement in old age, which may be sponsored by employers or the state. In many poorer countries, support for the old is still mainly provided through the family. Today, retirement with a pension is considered a right of the worker in many societies, and hard ideological, social, cultural and political battles have been fought over whether this is a right. In many western countries this right is mentioned in national constitutions.

Retirement age

This article lists the statutory retirement age in different countries. In some contexts, the retirement age is the age at which a person is expected or required to cease work and is usually the age at which they may be entitled to receive superannuation or other government benefits, like a state pension. Policy makers usually consider the demography, fiscal cost of ageing, health, life expectancy, nature of profession, supply of labour force etc. while deciding the retirement age. The increase in life expectancy is used in some jurisdictions as an argument to increase the age of retirement in the 21st century.

Social security

Social security is "any government system that provides monetary assistance to people with an inadequate or no income." In the United States, this is usually called welfare or a social safety net, especially when talking about Canada and European countries.

Social security is asserted in Article 22 of the Universal Declaration of Human Rights, which states:

Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international co-operation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.

In simple terms, the signatories agree that the society in which a person lives should help them to develop and to make the most of all the advantages (culture, work, social welfare) which are offered to them in the country.Social security may also refer to the action programs of an organization intended to promote the welfare of the population through assistance measures guaranteeing access to sufficient resources for food and shelter and to promote health and well-being for the population at large and potentially vulnerable segments such as children, the elderly, the sick and the unemployed. Services providing social security are often called social services.

Terminology in this area is somewhat different in the United States from in the rest of the English-speaking world. The general term for an action program in support of the well being of poor people in the United States is welfare program, and the general term for all such programs is simply welfare. In American society, the term welfare arguably has negative connotations. In the United States, the term Social Security refers to the US social insurance program for all retired and disabled people. Elsewhere the term is used in a much broader sense, referring to the economic security society offers when people are faced with certain risks. In its 1952 Social Security (Minimum Standards) Convention (nr. 102), the International Labour Organization (ILO) defined the traditional contingencies covered by social security as including:

Survival beyond a prescribed age, to be covered by old age pensions;

The loss of support suffered by a widowed person or child as the result of the death of the breadwinner (survivor’s benefit);

Responsibility for the maintenance of children (family benefit);

The treatment of any morbid condition (including pregnancy), whatever its cause (medical care);

A suspension of earnings due to pregnancy and confinement and their consequences (maternity benefit);

A suspension of earnings due to an inability to obtain suitable employment for protected persons who are capable of, and available for, work (unemployment benefits);

A suspension of earnings due to an incapacity for work resulting from a morbid condition (sickness leave benefit);

A permanent or persistent inability to engage in any gainful activity (disability benefits);

The costs and losses involved in medical care, sickness leave, invalidity and death of the breadwinner due to an occupational accident or disease (employment injuries).People who cannot reach a guaranteed social minimum for other reasons may be eligible for social assistance (or welfare, in American English).

Modern authors often consider the ILO approach too narrow. In their view, social security is not limited to the provision of cash transfers, but also aims at security of work, health, and social participation; and new social risks (single parenthood, the reconciliation of work and family life) should be included in the list as well.Social security may refer to:

social insurance, where people receive benefits or services in recognition of contributions to an insurance program. These services typically include provision for retirement pensions, disability insurance, survivor benefits and unemployment insurance.

services provided by government or designated agencies responsible for social security provision. In different countries, that may include medical care, financial support during unemployment, sickness, or retirement, health and safety at work, aspects of social work and even industrial relations.

basic security irrespective of participation in specific insurance programs where eligibility may otherwise be an issue. For instance, assistance given to newly arrived refugees for basic necessities such as food, clothing, housing, education, money, and medical care.A report published by the ILO in 2014 estimated that only 27% of the world's population has access to comprehensive social security.

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