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BeeHive  >  BeeLines  >  It’s Coming Home!

It’s Coming Home!

I don’t know about you, but I’m just loving all this football stuff right now.  This kind of summer-long party atmosphere is something we should definitely try to do more of as we go along.  It’s a shame we can’t get such worldwide interest in other subjects though; I mean that kind of focus on things like pensions would be fabulous wouldn’t it?  Mind you, even in the frenzied atmosphere of the World Cup some people still manage to keep their feet rooted firmly in the financials of the future.  I was pretty much stunned to note that FIFA, the world football governing body, has just put in place a retirement plan for its executive committee members so they’ll be able to keep things together after the party years have long gone. 

The new scheme, which has cost a cool 12.5 Million Swiss Francs this year, which is about 8 Million Euros, which is itself about 5 Million UK Pounds 1, is aimed at providing pensions for FIFA committee members who retire from 2005 onwards.  It’s a strange scheme if judged by our standards in that it provides retirement benefits for executive committee members only and provides nothing for family members or relatives 2.  But stranger still, to me at least, is that it’s been put in place at all in what to the outside world seems to be an industry based on the here and now.  It just goes to demonstrate that we’re all in the same boat real-life wise when it comes to retirement provision. 

I saw something else that kind of resonated with that thought in a report that reckoned that by 2050 something like 17% of the world’s population will be over the age of 65 3.  Getting older and living longer and healthier lives is a worldwide phenomenon; just like football.  So, in a worldwide first, here’s the BeeHive stepping up to the penalty spot with a snapshot summary of what’s happening on the pension front in the 32 countries in the group stages of the World Cup.  You’ve got to admit it, no-one else provides you with this kind of stuff do they?  Either I’m at the vanguard of a new age in worldwide pensions, or I’ve stumbled across yet another blind alley.  What the hell.  Here’s a taster of what’s what as far as pensions go in the top footballing nations.  It may not change your life to know all this, but it’ll give you something to talk about to all your new friends around the world while you’re sipping your beer late into the night in a Munich street café or something.  Although if my life’s anything to go by talking about pensions too much will probably lose you more friends than it’ll get you, so try not to let it dominate your conversation…


Group A – Ecuador, Germany, Poland and Costa Rica


Well the big thing in Ecuador on the pension front right now is the pension crisis that is staring the country in the face.  Now where have we heard that before?  As crises go, Ecuador’s is a doozy with a deficit of $3,700 Million and the government in hock to the social security system to the tune of $2,300 Million.  Right now Ecuador has four active workers for every one pensioner, but just like everywhere else that ratio is rapidly changing and longer life expectancy is the culprit.  According to the Social Security Office of Ecuador’s banking sector reform is “absolutely necessary” as the current pension system is now “unsustainable” 4.


Regular BeeLiners will remember that I have written about the so-called Riester Reforms in Germany a number of times lately.  The whole idea of these recent reforms has been to get private pensions kicked off in the German pension market that up to now has been dominated by strangely funded occupational arrangements.  Well the ‘Riester-Rente’, a kind of government subsidised private pension that was launched back in 2002, has gone from strength to strength and over 6 million have now been sold. Take up in the first quarter of 2006 has seen 570,000 new contracts established (11% of the total so far) and this has led many to praise the government’s latest reforms (in 2004) that gave greater portability and loosened up the contribution requirements.  Further reforms planned for 2008 look set to add fuel to the flames and the reforms are clearly having the desired effect with a government spokesman saying recently that “great progress has been made in expanding and strengthening of second and third pillar pensions” adding that “this must continue” 5.  I’m a big fan of what’s going on in Germany right now, not just the football, but the pension stuff too.  Our government could do worse than to check out what’s happening; it’s always good to keep abreast of what the other teams are up to.  Maybe they could study videos of German cabinet meetings; that sort of thing.


Poland famously got going on the pension reform front years ago now way back in 1969.  The old system, which was predominantly defined-benefit based has been rebuilt almost entirely on a defined-contribution model with all employees born after 1st January 1969 becoming entitled to a basic state pension complemented by mandatory work schemes and voluntary pensions too.  Again, where have we heard all this before?

The individual pension accounts, which were launched on 1st September 2004, are now running alongside the mandatory Employee Pension Plans (EPPs would you believe?) and effectively mean that younger workers in Poland will one day be looking to the annuity markets when they come to convert their pension savings into income streams.  There’s plenty of scope for liberalisation and extension of choice there one day, but so far what’s going down in Poland is widely regarded as a good example of the way forward for the rest of Europe 6.

Costa Rica

Costa Rica is another country confronted with the stark choices offered by complete reform.  The current system simply can’t last into the future.  At the moment the Costa Rican Social Insurance Fund which was put in place in 1941 pays out good benefits for relatively low contributions.  Someone with 40 years’ service can count on income replacement of around 80% from the system for an annual contribution of only 7.5% of salary.  That’s been made possible by the demographic shape of the population.  In 1990 there were as many as nine people of working age for every one pensioner, but the sharp change in demographics that is about to hit will change that dramatically so that by 2070 there will be only two workers for each pensioner.  Clearly things will have to give and that is why reform is at the top of the agenda right now (like where isn’t it?) and Costa Ricans have recently seen an increase in state retirement age to 60 for women and 62 for men as the start of all that 7.


Group B – England, Sweden, Trinidad & Tobago and Paraguay


Strictly speaking the UK I suppose, not England.  We don’t have a UK footie team, but we’re all in the same pension boat, so I’ll need some leeway on the title if you’ll grant it.  (Mind you, if we did have a UK football team I’d have Giggsy out there right now for sure.)  There are other difficulties with writing about UK pensions as I would expect all BeeLiners to be fully up to speed with all the ins and outs of our pension stuff so I’ve picked on a more obscure issue to drop into the mix here for you. 

While trawling through the reams of stuff churned out every day by our rulers I picked up on a fabulous statement by John Hutton, the current Secretary of State for Work and Pensions, where he has called for ‘key industry stakeholders’ to ‘get involved in the Government’s drive to cut red tape’ and make pensions simpler.  I don’t know about you, but that brought a smile to my face.  Like, right.  But evidently for those of us who thought we’d heard it all there’s going to be a Simplification Advisory Group set up soon that will focus on simplifying pensions 8.  Here we go again…


The Swedish financial regulator, the Finansinspektionen no less, introduced a new ‘traffic light’ system at the start of 2006 to identify and highlight life assurance companies’ and occupational pension funds’ exposure to risk.  The idea is that risks can be identified at a sufficiently early stage to avoid problems, something that’s not a million miles from what goes on over here.  The good news seems to be that a first pass in the first quarter of 2006 has seen the red light showing for fewer than 1% of the companies and funds under the spotlight.  Mind you, that’s still 1.8 Billion Euros worth of peoples’ money at risk, so it’s not good news for everyone I guess 9.

The Swedish pension system itself I won’t comment on as I think we’ve had it up to here with hearing about it as the Turner Report made such a thing of it.  All I’d say on that front is that before we all go along with the myth of 0.3% charges it would be good if we could get a better hang on the real costs of the embryonic Swedish system with state subsidies stripped out.  But I don’t want to be too negative any more, so I’ll leave it at that.  (Don’t worry though, I’m sure I’ll come back to the subject in a later BeeLine when the World Cup’s over and I’m my normal miserable self again.)

Trinidad & Tobago

Here’s a good one.  Trinidad & Tobago isn’t one of the world’s largest countries, but it does have a well developed social security system with a contributory National Insurance Scheme (a bit like in the UK) and a non-contributory Old-Age Pension.  In addition the system is supplemented by private pension plans.  That’s the good stuff, but on the not so good side are the usual problems that are cropping up everywhere quite frankly.  First there is the issue of limited coverage (tell us about that) and the management and administration costs of the private pension market, all put into sharp focus by the demographic wave that’s about to bring the problems related with a rapidly ageing population.  In Trinidad & Tobago immediate social security reform is “of critical importance” according to a recent strategic development plan looking at the year 2020 and beyond 10.


The big issue in Paraguay right now is that fewer than 25% of older people have pensions.  According to a report published last month the majority of older Paraguayans lack access to basic social protections and pensions and this means that the realities of life lead to people working into advanced old age.  In the country areas this has led to 60% of older adults continuing to be employed in agriculture which may be a good thing or a bad thing depending on your outlook on life I suppose, I mean who’s to say that a sedentary lifestyle is better?  But the problems, of course, manifest themselves more in urban areas where there is little work to be had for an ageing workforce 11.  Clearly the Paraguayan government has its work cut out on the pensions and social security front.


Group C – Argentina, Holland, Ivory Coast and Serbia & Montenegro


The Argentine social security system has been through what you’d call a pretty challenging time in the last twenty years caused by the rapid ageing of the population and the deep recession that preceded the so-called Cavallo Reforms.  The country seems to have been one of the first to be hit by the demographic wave and is seen as a good example of how others may ride it.

In Argentina pensions are described as ‘a charged political issue’, something that’s becoming more and more the case across Europe these days too.  The government response to a creaking and overloaded central social security system was to set up a dual system based on a propped-up state system running alongside funded accrual of pension assets in the private sector.  Without going into the ins and outs of it you can imagine that wasn’t an easy road in the early days, but now twelve years on (and just seven years after the implementation of a new social security system) most Argentinian workers are channelling their compulsory contributions (of 11% of salary) into private funds.  The payback in terms of increased investments flowing from the capital markets into government bonds and corporate equity has brought much needed help to both the public and private sectors.  It’s still early days, but the Argentina model is something many other countries are looking at as they too struggle with outdated social insurance systems and the realities of an ageing workforce 12.


Well, the Netherlands, I guess.  The Dutch pension system, as you probably already know, is one of the most developed in Europe.  In fact, the pension assets of the UK, the Netherlands and Germany combined form the lion’s share of all pension funding in the 25 European Union states.

Unsurprisingly, like in the UK, it is the changing shape of the way people invest that interests people in the Netherlands these days at least as much as the level of savings that people do or don’t achieve.  Recent research carried out in Holland has predicted that the ageing of the population of Europe is likely to lead to a lower demand for equities and a higher demand for bonds.  The reasoning behind this is that younger people tend to invest in equities, whereas older people are more likely to avoid risk and are therefore more attracted to bonds.

Perversely, the problems caused by mass ageing will hit both the unpensioned and the pensioned.  In different ways, of course, and in different degrees, but none of us will be free of the consequences.  Mind you, the Dutch government is being encouraged to increase the state pension age from 65 to 67 in a two stage plan starting in 2015 and aimed at 2025, an idea we’re all familiar with here in the UK.  There are also some worrying data that indicate that a large number of Dutch corporate pension funds are intending to wind up in the near future.  Spooky or what? 13

Ivory Coast

And now, I suppose, for something completely different.  The problems facing people living in Cote D’Ivoire are similar to those the people of Paraguay are struggling with.  The low level of pensions and pension coverage means that very few of the older citizens of the country actually get to enjoy a financially stable retirement.  The country has a population of about 17.5 million, but with an interesting age structure.  40.8% of the population are aged under 14 and 56.4% are aged between 15 and 64.  Those mathematicians among you will be able to work out from that that only 2.8% of the population is over the age of 65 14.

Serbia & Montenegro

Another country in transition, Serbia and Montenegro began its move to being a market economy before many of its neighbours.  The country was beset by inflation of 115% as recently as the year 2000, but things are on a much more even keel now, with inflation in 2005 down to an estimated 15.5%.  On the pension and social security front the good news is that pensions and social benefits are now being paid on time, which may not sound much, but it is a big improvement on the recent past where it was commonplace for pensions to be paid in arrears.  Pensions have also been recently brought into line with earnings levels and the living standards of the poorest pensioners have thus been protected.

The thing is, and you may have heard the football commentators say this the other night like I did, the two countries, Serbia and Montenegro, have decided to split soon.  So, not only will this be the last time they’re in the World Cup as one team, but the social and pension reforms will presumably soon be going their separate ways too.  Mind you, they’ll clearly have different issues that will confront them because of their relative sizes.  Serbia is by far the larger of the two countries with a population of around ten million people, but Montenegro is much smaller with a population of just 620,000. 15


Group D – Portugal, Mexico, Angola and Iran


This summer sees a government reform package being unveiled in Portugal to try to nip the coming pension crisis in the bud.  In Portugal, like other European countries, the birth rate has dipped significantly with a drop of over 35% in just the last thirty years.  The problem with so few children being born is that the present generous pension provision will be undermined within a generation.  At the moment people get a pension of something like 80% of their salary when they retire and that’s clearly unsustainable.

In a strange approach the Portuguese government is proposing to up the contribution rate for people with fewer children and decrease the contribution rate for people with more than two children.  But long-term reforms like that will need time to kick in and most people are bracing themselves for cuts in benefits in the meantime as well as accepting higher contributions and longer working lives.  All familiar stuff to us I guess? 16


In Mexico today one of the big issues is whether a national pension is affordable.  The Centro de Investigacion y Docencia Economicas (Mexico’s kind of economic research centre) reckons it would be possible within the budget constraints.  But at the moment pension coverage is patchy with 70% of older people living in poverty.

As an example of that, in Mexico City most older people are women with 63% of 70 year-olds and 70% of 80 year-olds being female.  Very few of them have pensions and where they do they tend to be less adequate widow’s pensions.  Reform clearly needs to come quickly.  There’s an interesting development I picked up on though that I guess Woody Guthrie would have approved of, and that concerns a group of Mexican migrant workers who are referred to as ‘braceros’.  Evidently, during World War Two many Mexican men were invited to work in the US under a program called Braceros (it stands for guest-workers I think).  Under the plan the Mexican and US governments took 10% of the workers’ salaries and put the money in a pension fund that up to now has never reached the beneficiaries.  A big campaign has been successful in reuniting people with their money and over 100,000 braceros have claimed their pensions so far.  All good stuff! 17


Like the Ivory Coast earlier it’s been difficult to turn up much in my search for social security and pension systems in Angola.  But again I have been able to find some interesting demographic data that may explain why.  (It’s equally possible that I haven’t searched thoroughly enough I suppose, so I should say I haven’t found anything easily!)  The country has an estimated population of just over 12 million and the age profile of the population is surprisingly similar to that of the Ivory Coast with 43.7% of people age 14 and under and 53.5% of the population aged between 15 and 64.  Again anyone adept at mental mathematical gymnastics will immediately realise that in Angola too only 2.8% of the current population is aged 65 or over. 18


The ageing issue in Iran will bring all the usual issues to bear by the middle of the 21st Century that are affecting countries all over the world.  United Nations projections show that by 2050 the median age of people in Iran will be around 40, whereas in 2004 it was just over 20.  Also by that date nearly one in four Iranians will be aged over 60.  In terms of pension provision, though, Iran currently has one of the highest replacement rates in the world for an average full-career worker at over 100%.  That is to say that the gross pension granted at retirement could be more than an employee’s final level of earnings.  Clearly, sustaining this level of pension provision will be difficult as the population ages, but if reforms are made early enough the benefits of having such a low median age today ought to be helpful 19


Group E – Italy, Czech Republic, Ghana and the United States


Ageing is the big issue in Italy right now.  It is the European Union country with the biggest problem in this regard due to its very low birth rate and low coverage of older employees in the workforce.  In fact, this thing about older people remaining in the workforce is something all countries need to get to grips with these days I suppose, so it’ll be interesting to see how the Union-wide implementation of anti-ageist legislation affects things from this year on.  While I’m writing this it seems to me that Age-Day, the 1st of October 2006, is the real pensions A-Day for the whole of the European Union and I’ve just made a mental note to devote a future BeeLine to that topic sometime.  Mind you, I’ve got to finish this monster thing on the World Cup first, when I started it I thought it would just be a page or two.  (If you thought that too when you started reading it, I’m sorry about that…)  Still, to get on, the other problem Italy has on the pension front is that there has been hardly any build up of private pensions according to recent research by Iris, an independent subsidiary of Rabobank.  Pension reform has been very much in the news in Italy for the last few years and it has become one of the hot election topics.  That’s something that’s not likely to go away any day soon 20.

Czech Republic

Reading through a recent OECD report on the Czech Republic (as you do) I wasn’t surprised to see the same old issues coming up; fiscal stability; pay-as-you-go sustainability; pension simplification; diversification into private provision etc etc.  The Czech Republic is some way down the road to Euro entry and has more than just its pension system to keep its government focused, but the pension problems there are acute.  The country faces one of the biggest demographic challenges in the OECD area according to the 2006 report and one of the big concerns is whether the public pension system will be able to cope with the rapid growth in older age groups 21.  The more I read this stuff the more I think we could do with a common response to these same old issues cropping up all over Europe and the world.  Encouraging private pension savings like they have recently done in Argentina (and like we used to back in the 1960s and 1970s) looks a better bet to me than governments standing on the beach trying to stem the demographic tide.  Another future Euro BeeLine I think.


The Presidential Commission on Pensions proposed a three-tier pension structure for Ghana last year.  The central idea was to put in place a sustainable system to pay out adequate lump sum benefits through the Social Security and National Insurance Trust scheme, but without putting too much burden on people in the way of contributions.  The first-tier benefits will be sort of like our Old Age Pension if you like, although it seems more like Serps as it is based on a defined-benefit basis.  The contribution rate for employees will be 5% and for employers 12.5%, so it should deliver worthwhile benefits. That will be backed by a compulsory privately-managed occupational scheme (shades of the NPSS?).  On top of all that there will be a third-tier of private personal pensions which will come with tax incentives 22.

One excellent feature of this new approach in Ghana (in my opinion) is the way that it is based on giving more control and flexibility to members; in particular it is envisaged that contributors could gain access to some of their funds before retiring.  Regular readers of the BeeLines will know that I think that the more useful pensions are during people’s working lives, the more likely they will be to save in them in the first place.

United States

The US, the one place where I suppose they understand the power of harnessing self-interest, is facing up to the same demographic pressures as the rest of us, but their approach to the problem is a bit different.  To start with, of course, they will need to work out how to come to terms with the impending retirement of the Baby-Boomers from 2010 onwards because there are real fears that the social security system could become insolvent if no action is taken.  The recent increase in the pension age to 67 has helped, but there’s still a way to go yet.

What interests me in the current debate in the US is that President Bush reckons that the best way out is to partly privatise things by allowing younger people to opt-out of the social security system and establish private accounts instead.  Now, that’s interesting as that’s exactly what we did once with contracting-out, but we’re just in the process of knocking the concept on the head.  Funny world isn’t it? 23


Group F – Brazil, Australia, Croatia and Japan


Anyone who’s still reading this thing at this stage by the way, thanks for the company.  It’s turning into a nightmare to be honest (I’ve still got three groups to go!)  At this rate I’m going to miss tonight’s matches which will sort of defeat the object of it all in a way.  But let’s get on, and thanks again for keeping with it.  (Both of you!)

Brazil’s an easy one because President Luiz Inacio Lula da Silva has won a big political battle over there to bring in controversial pension reforms.  Basically they’ve grabbed all the big nettles and are about to raise the retirement age and cut back the pensions of civil servants.  In addition to that, civil service pensions will also be subject to taxes.  Mind you, the retirement ages have only gone up to 60 for men and 55 for women, which might surprise you, and there’s a seven year phasing period for it all to get fully implemented too.  But it’s front-page news in Brazil (when the football isn’t) and the current government has finally brought in the reforms that have been constantly talked about since 1990.  It’s seen as a big step to reform the pension system so it better suits the population of 180 million people and the reforms seem to have popular support 24.


Australia, as you’ll probably already know, went in for the pension reform thing years before anyone else.  Back in the 1990s the Australian government brought in compulsory private pensions for all (except very low earners).  The compulsion hit employers and although it started off at just 3% of payroll it’s since shot up to 9%.  Employees are able to add another 2 or 3% themselves if they want to. 

Today 95% of employees are ‘doing their super’ in this compulsory system and there’s a fair bit of money sloshing around in the giant industry-wide funds that hold the cash, but there are real fears emerging that the money put aside is nowhere near enough to provide adequate pensions.  That, coupled with the fact that Australia has a means-tested Old Age Pension just like the UK, seems to me to be storing up trouble for the future.  I saw some figures that imply that someone paying the maximum of 12% for 40 years will get a pension of something like 50% of their earnings.  That’s all right I guess, but not everyone will be paying the maximum of 12% and certainly not everyone will be able to rack up 40 years in the scheme.  I wrote something about this problem as it relates to the UK proposals for a National Pension Savings Scheme (it was entitled ‘The Trouble is we’re not all Eighteen’ or something like that, which is sort of self-explanatory).  All Australians weren’t eighteen in 1990 either 25.


Croatia has just gone through an upheaval in its pension system and has moved from a pay-as-you-go approach, where pensions were dependent on political promises and subject to affordability, to a mixed state and private system.  It’s not a clear cut though.  Under the old system a mandatory cost of 19.5% of earnings was applied to the state scheme, but under the new system a part of that contribution (5%) can be redirected into a personal account.  The other part of the contribution (which has now risen to 15%) still has to be paid to the state pay-as-you-go scheme however 26.


Japan has one of the most developed private pension systems in the world along with the US and the UK, but has serious problems with regard to demographics caused by the low birth rate, above average longevity and limited immigration.  Over 65s in Japan will soon account for 28% of the population (compared to 15% in the UK and 12% in the US).

State pensions are obviously feeling the pinch in Japan, but so too are private occupational pensions many of which are funded out of corporate earnings rather than being backed by trust-based funds separate from the employers’ businesses.  Unsurprisingly the new Prime Minister, Junichiro Koizumi, has put pension reform at the top of his political agenda 27.


Group G – South Korea, France, Switzerland and Togo

South Korea

According to the National Assembly’s Special Committee on Pension Reform (we’ve all got them haven’t we?) the problem with the country’s National Pension System is that one-third of those it is aimed at haven’t enrolled in it.  Worse still, those who’ve not joined are the lowest paid.  The current system requires fairly modest contributions, but even these seem to be too much for many people to spare.  This all sounds so familiar doesn’t it?  There really should be some kind of worldwide forum to save us the bother of going through these things twice.  The proposed solution in South Korea is that a Minimum Pension System should be put in place to provide minimum pension benefits that would reach everybody 28.


It was recently announced that France’s attempts to significantly reduce its social security budget in 2006 will not be effective, mainly because of an increase in state pension costs.  The twin cost giants of health insurance and pensions are fighting it out for top place in France right now.  Today health insurance accounts for over 60% of the social security budget, but the impending retirement of ‘les Boomers’ means pension costs could soon steal the top spot.  Reform, as ever, is in the air 29.


The Swiss have come up with a unique solution to the problems affecting their state pension system.  Under a new plan it may use some of the profits of the Swiss National Bank to prop up state pensions.  In the view of the bank there is no other country in the world whose central bank has become the direct financial source of funding of a social security scheme. 

The initiative which is being driven by the Swiss Social Democratic party would divert a chunk of the bank’s annual profit to the Old Age and Survivors’ Insurance Fund 30.


Information on the Togo social welfare program is a bit thin, but I have been able to find out that a law passed in 1973 covers old-age benefits as well as maternity benefits, disability benefits, employee compensation and death benefits.  Retirement is allowed after age 55, but there is a general problem for women as a wife appears to have no inheritance rights on the death of her husband.  Once again, some interesting demographic data paint a good picture of why policies today though may be prioritised towards the needs of the young rather than the old; in a population of just over 5.5 million 42.3% are aged under 14 and only 2.6% are aged 65 and over 31.


Group H – Spain, Tunisia, Saudi Arabia and Ukraine


I have just read a Standard & Poor’s note that says that government spending in Spain related to the ageing of the population could undermine the country’s sovereign rating.

The Spanish Government has just this year increased retirement pensions by 4.92% under the terms of something called the Toledo Pact where it is guaranteed that inflation will not erode the purchasing power of pensions.  Mind you, I’ve also noticed that some Spanish banks are now getting into the equity release market and using the security of older people’s properties to pay the owner a monthly ‘pension’ based on the value of the house.  That’s something that’s bubbling along just under the surface everywhere these days with so many people coming into the retirement zone with all their eggs in the property basket isn’t it?  Proper pension reform needs to encompass more than just earmarked pension assets I guess 32.


The Tunisian pension system is not unusual in that pensions and other benefits are provided by partially funded pay-as-you-go arrangements.  It is designed to be redistributive (ie to skew the benefits towards the least well-off) as most similar systems in place around the world are, but it is both fragmented and complex (tell us about it!) and although it seeks to provide high benefits it is getting by with lowish contributions.  It can do this as the workforce is relatively young, but in the long term reforms such as increasing the retirement age are seen as necessary 33.

Saudi Arabia

Saudi Arabia introduced a new social insurance system in 2001 covering workplace insurance and pensions.  The contribution rate, which is voluntary for Saudi citizens in private business, is set at 18% of salary, with 9% being borne by employers.  So it’s a straight split 50/50 between employees and employers and the scheme includes provision for early retirement.  The new system, which was phased in over a three-year period (with employee contributions of 6%, 7.5% and then 9%) was designed to bring insurance contributions of employees into line with those of the civil service and the military 34.


There’s an interesting experiment going on in the Ukraine right now with a pilot study to see whether second-tier money-purchase pension accounts can be put in place funded by some of the money contributed by employers towards their employees’ pensions.  The idea is that 7% of the mandatory contribution would be channelled into employees’ own personal accounts (a term that seems to be cropping up everywhere these days) with annual statements tracking the investment performance of individual accounts.  Workplace pensions based on individual ownership, now where have we heard of that one before? 35



I should have waited until we’d got down to the last sixteen teams really.  It would have been a hell of a lot easier.  Still I’ve done it now and that’s that I guess, as good a summary as you’ll ever find on pensions and the World Cup I’ll bet.  It’s interesting, isn’t it, that for all the different situations people are in in all the countries around the world the one common theme that is confronting us is this ageing issue.  It’s difficult sometimes not to dress it up as bad news, like it would be better all round if we all just didn’t live for so long?  Right!  So I don’t go along with all the doom and gloom that gets dragged up every time we talk about these things.  If getting old’s a problem then I suppose it’s a problem worth having.  I think Groucho Marx or someone once said that getting old might not be so good, but it’s better than the alternative.  It might have been Bob Monkhouse for all I know, or W C Fields, but someone said it anyway.  Groucho Marx did say that getting old was something any idiot could do though.  In his view all you have to do is live long enough.  And that’s where we are with it it seems.  We’re going to end up in a world where reaching old age is increasingly common.

Strangely enough, and in one of those coincidences that makes me think it can’t be a coincidence, I’ve just this minute received a bit of spam e-mail about ageing.  I mean, it can’t be coincidental can it?  Usually I don’t read this stuff, but I’ve just read this one and I think it’s pretty apposite.  I won’t attach it to this BeeLine in case it’s buggy or something, but I’ll replay some of it for you here in my own words.  It picks up on the fact that when we’re young we like the idea of getting old.  You know, like when you’re under ten years old you get so excited about ageing that you even think in fractions.  “How old are you?” “I’m four and a half!”  That sort of thing.  We’re never thirty-six and a half are we?

When you’re in your teens you just can’t be held back on the age front.  Like “I’m going to be sixteen!”  Even if you’re thirteen at the time, you’re going to be sixteen.  We’ve all been there.  Twenty-one is kind of the greatest day of your life.  So great in fact that you actually ‘become’ twenty-one.  It’s a language thing.  The word ‘become’ is telling. 

A bit like ‘turning’ thirty in fact.  Ouch!  It sounds bad doesn’t it?  “I’ve turned thirty!”  “Oh, I’m sorry to hear that…”  Your life’s gone already.  But ‘becoming’ twenty-one only to end up ‘turning’ thirty is nowhere near as bad as ‘pushing’ forty!  Whoa! That’s not good, like where are the brakes?  But there aren’t any and before you know it you ‘reach’ fifty!  It’s that language thing again.  You’ve actually ‘reached’ the top.  It’s all over, gone before you got the hang of it.  But you ‘make it’ to sixty…

That wasn’t expected.  ‘Becoming’ twenty-one was expected and after that ‘turning’ thirty, ‘pushing’ forty and ‘reaching’ fifty all seemed pretty inevitable too.  But ‘making it’ to sixty is a bonus right?  At that stage, momentum kicks in and before you know it you ‘hit’ seventy!  From there on in it’s only a matter of keeping your head down and ‘getting into’ your eighties.  At that point it seems it’s all about the closing-in of timeframes.  You kind of ‘hit’ lunch, ‘turn’ 4:30 and finally ‘make it’ to bedtime every day, that kind of thing.  But if you’re lucky enough to struggle through to your nineties everything sort of starts going backwards; “I was just ninety-two.” 

If you make it over one hundred then two things seem to be on the cards; first you realise that fifty was half a lifetime ago and you were stupid to think you’d ‘reached’ anywhere by then particularly with your strange ideas about retirement, and second you get your child’s view of time back - “I’m nearly a hundred and a half!”.

It’s funny to think how the language we use tricks us into taking a weird view of what’s happening all around us.  If we’re not careful we’ll only ever to be able to regard the fact that we’re all getting older all the time as being nothing more than just another problem that gets in the way of our enjoying our lives.  The spam e-mail tells me we need to lighten up a bit on the age thing.  Not a bad message in the year that anti-ageist legislation is being put on the EU statute books.  If we’re not careful that’s going to end up being dressed up as bad news too…..

Steve Bee

23 June 2006

Any research and analysis has been provided by us for our own purposes and the results are being made available only incidentally.


1. BBC - Market Data - Currency Exchange Rates on 23 June 2006

2. Investment and Pensions Europe - 'FIFA sets up 8m Euro executive pension fund' - 9 June 2006

3. U.S. Census Bureau - 'Global Population at a Glance: 2002 and Beyond' - March 2004

4. Global Action on Aging - 'Pension Issues around the World'

5. Investment and Pensions Europe - 'Germany's Riester demand continues to surge' - 16 May 2006

6. European Pensions and Investment News: 'Poland's newly reformed system of retirement provision stays on course, although consolidation remains in the slow lane' - 4 July 2005

7. Worldbank, Finance and Development - 'A Reform Proposal for Costa Rica's Pension System' (article derived from the authors' "Costa Rican Pension System: Options for Reform," World Bank Policy Research Working Paper No. 1483, June 1995 (Washington).)

8. Investment and Pensions Europe - 'UK minister wants to cut pension "red tape"' - 9 June 2006

9. Investment and Pensions Europe - 'Some Swedish life, pension assets get red light - 23 May 2006 

10. Government of the Republic of Trinidad and Tobago - Vision 2020 Planning Committee - Labour and Social Security sub-committee strategic statement

11. Global Action on Aging - 'Pension Issues around the World'

12. Center for International Private Enterprise - 'Scorecard on Argentina's Pension Reform' - 2001 

13. European Federation for Retirement Provision - Total 2nd pillar pension fund assets (1995-2002), excluding book provisions within sponsoring companies, figures for 2002 used. Investment and Pensions in Europe - 'Ageing will change investment behaviour - study' - 19 May 2006 and 'Raise pension age to 67, says DNB president' - 12 May 2006. European Governments on-line - 'European Member States'

14. Central Intelligence Agency - World Factbook - Cote d'Ivoire, 13 June 2006. Global Action on Ag(e)ing - 'Pension Issues around the World'

15. The World Bank Group - 'About Serbia and Montenegro-2001', September 2002. Central Intelligence Agency - World Factbook - Serbia and Montenegro, 13 June 2006. Wikipedia - Serbia and Montenegro Demographics.

16. Investment and Pensions Europe - 'Portugal sets out pensions reform agenda' - 17 May 2006

17. Global Action on Aging - 'Pension Issues around the World'

18. Central Intelligence Agency - World Factbook - Angola, 13 June 2006

19. New America Foundation 'The Middle Aging of the Middle East' - 1 August 2004. The World Bank - 'Pensions in the Middle East and North Africa' - 2005.

20. Investment and Pensions in Europe - 'Ageing will change investment behaviour - study' - 19 May 2006

21. OECD - 'Economic Survey of the Czech Republic, 2006'

22. Ghana Review International - 'Commission proposes 3-tier pension structure' - 22 September 2005

23. BBC News online - 'Pension reform: What other countries do' - 24 November 2005

24. BBC News online - 'Lula wins Brazil pension reforms' - 12 December 2003

25. BBC News online - 'Pension reform: What other countries do' - 24 November 2005

26. Raiffeisen obvezno mirovinsko društvo - 'Pension refoem in Croatia' - 23 June 2006

27. BBC News online - 'Pension reform: What other countries do' - 24 November 2005

28. Global Action on Aging - 'National Pension Plan Has 'Blind Spots' - 14 February 2006

29. Investment and Pensions in Europe - 'Pensions worsen France's deficit' - 14 June 2006

30. Investment and Pensions in Europe - 'Swiss central bank slams "populist" pension plan' - 16 June 2006

31. Central Intelligence Agency - World Factbook - Togo, 13 June 2006. Encylopedia of the Nations - Togo - 'Social development'

32. Global Action on Aging - 'Pension Issues around the World'. Investment and Pensions in Europe - 'Ageing could hit France, Spain ratings - S&P - 6 June 2006

33. The World Bank Group - 'Options for pension reform in Tunisia'  - July 1993

34. Saudia-online - 'Seven chapter new social insurance system was issued in the Kingdom of Saudi Arabia'

35. USAID Ukraine Pension Reform Implementation Project - Project Announcement - January 27 2006