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Pensions reforms have slowed in OECD countries but need to continue

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Further reforms are needed across OECD countries to mitigate the impact of population ageing, increasing inequality among the elderly and the changing nature of work, according to a new OECD report.

Pensions at a Glance 2017 says that public spending on pensions for the OECD as a whole has risen by about 1.5% of GDP since 2000. However, the pace of spending growth is projected to slow substantially. 

 At the same time, recent reforms will lower the incomes of many future pensioners. People will live longer and to ensure a decent pension would have to postpone the age of retirement.

“The challenges of financial sustainability and pension adequacy mean that bold action from governments is still needed,” said OECD Secretary-General Angel Gurría. “The world of work is changing fast and policy makers must ensure that decisions made today take this into account and our pension and social protection systems do not leave anyone behind in retirement.”

 The net replacement rate from mandatory pension schemes for full-career average-wage earners entering the labour market today is equal to 63% on average in OECD countries, ranging from 29% in the United Kingdom to 102% in Turkey. On average, replacement rates for low-income earners are 10 points higher and range from under 40% in Mexico and Poland, to more than 100% in Denmark, Israel and the Netherlands.

 Over the past two years, one-third of OECD countries changed contribution levels, another third modified benefit levels for all or some retirees and three countries legislated new measures to increase the statutory retirement age. Under legislation currently in place, by 2060 the normal retirement age will increase in roughly half of the OECD countries, by 1.5 years for men and 2.1 years for women on average, reaching just under 66 years. The future retirement age will range from 60 years in Luxembourg, Slovenia and Turkey to 74 in Denmark, according to the latest estimations.

 The projected increase in retirement ages will be exceeded, however, by expected advances in longevity, meaning that the time people spend in retirement will increase relative to people’s working lives. Employment at older ages will need to increase further to ensure adequate pensions for many people, according to the report.

 Pensions at a Glance 2017 also looks at ways countries can meet the growing calls for more flexible retirement options. Rigidly set retirement ages might not be beneficial for society as a whole. Currently, only around 10% of Europeans aged 60-69 combine work and pensions. Of those that do work beyond the age of 65, half work part-time — a share that has been stable since the 1990s. Several countries including Australia, the Czech Republic, France and the Netherlands allow for early partial-retirement schemes.

 Obstacles to combining work and pensions after the official retirement age exist, for example through earnings limits in Australia, Denmark, Greece, Israel, Japan, Korea and Spain. Barriers to continuing to work beyond the retirement age also exist outside the pension system, especially through age discrimination from employers or in cultural acceptance of part-time work.

 Overall, for people with full careers, retirement is more flexible around the retirement age in Chile, the Czech Republic, Estonia, Italy, Mexico, Norway, Portugal, the Slovak Republic and Sweden.

 Policy makers need to ensure that postponing retirement should be sufficiently rewarding while not overly penalising people who retire a few years before the normal retirement age. In Estonia, Iceland, Japan, Korea and Portugal, the financial incentives to continue working after the retirement age are large but costly for pension providers. Flexibility should be conditional on ensuring the financial balance of the pension system, with pension benefits actuarially adjusted in line with the flexible age of retirement.

 Pensions at Glance 2017 provides comparative indicators on the national pension systems of the 35 OECD countries, as well as for Argentina, Brazil, China, India, Indonesia, the Russian Federation, Saudi Arabia and South Africa.

 Country notes are available for Australia, Canada, France, Germany, Italy, Japan, Spain, Switzerland, the United Kingdom and the United States.

 A recent OECD report, Preventing Ageing Unequally, also analysed the impact of rising inequalities and population ageing. It found that younger generations will face greater risks of inequality in old age than current retirees and for generations born since the 1960s, their experience of old age will change dramatically relative to that of previous generations.

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Former CIA analyst: ‘A costly and prolonged cold war now seems a certainty’

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‘No one knows how the war in Ukraine will end, but there is one post-war certainty: there will be a prolonged and costly Cold War between the United States and Russia,’ – predicts Melvin A. Goodman, a former CIA analyst, now a senior fellow at the Center for International Policy and a professor of government at Johns Hopkins University.

He writes: In an interview with David Ignatius of the Washington Post, who has been doing the bidding of the Pentagon and the Central Intelligence Agency for several decades, Secretary of State Antony Blinken emphasized the importance of a “long-term goal of deterrence.” Ignatius took this to mean that the Biden administration will make sure that Russia “should not be able to rest, regroup and reattack.”

In addition to this year’s record defense budget that found the Congress providing $45 billion more than the Pentagon requested, a so-called “emergency” provision will lay the foundation for adding scarce resources to defense spending in the coming year. This provision will allow multiyear, noncompetitive agreements to produce such ordinary weaponry as rockets and munitions.

According to the Washington Post, the Pentagon will now have a way to replenish its stockpiles that will provide a “new golden age” for military contractors.

The Biden administration’s gift to the military-industrial complex rivals what the Reagan administration provided in the 1980s and ensures the country’s rich market for weapons sales. Nearly half of the record defense spending of $858 billion goes to military contractors.

The House and Senate Armed Services Committees made sure that these spending spigots remain open by naming individuals with ties to the weapons industry to a commission that will review the Biden National Defense Strategy. The chairwoman of the commission, former Representative Jane Harman, protected Lockheed-Martin when she served on the Hill and currently is on the board of a military contractor that recently received a seven-year $800 million contract from the Pentagon.

The increased defense spending and the new emergency provision coincide with House Speaker Kevin McCarthy’s creation of a new committee — the House Select Committee on Strategic Competition Between the United States and the Chinese Communist Party. In view of the recent rise in anti-Asian violence in the United States, it can only be hoped that Democrats appoint members to the committee who understand the domestic consequences of hyping the threat from China at this particular time.

Our China policy is not working, and the exaggeration of the China threat comes just in time for the hawks in the political aviary who fear that the severe deficiencies of the Russian military in Ukraine is making it more difficult to exaggerate the Russia threat. I’ve been calling attention to the exaggeration of the Russian threat for the past 50 years.

But the policy community, the bipartisan congressional community, and the pundit community can’t let go of the idea that the Soviet Union and Russia present a ‘threat to the national security of the United States’.

The Biden policy ensures a robust military presence on the Russian border that will worsen Cold War 2.0. There will be prolonged and unnecessary increases in defense spending, and the absence of a diplomatic dialogue in those important areas where there is Russian-American agreement.

These areas include a variety of arms control and disarmament issues, such as stopping the proliferation of nuclear weaponry and limiting the use of space in the military competition as well as dealing with insurgencies and terrorism; environmental degradation; and future pandemics.

It is hard to imagine any Russian government willing to pursue diplomatic solutions with a United States that has sponsored a NATO with more than 30 members; a military base in Poland; a regional missile defense in Poland and Romania; and the use of Romanian military facilities close by Russian forces and the Black Sea.

This serious turning point is being ignored by the policy community as well as the pundit and academic communities.”

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Leak of secret trade-off deal triggers NGOs demand to end Congo oil auction

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A coalition of civil society groups have called for the immediate cancellation of a massive oil and gas auction in the Democratic Republic of Congo (DRC) following news of a secret deal between Oil Minister Didier Budimbu, Nigerian gambling tycoon Chukwuma Ayodeji Ojuroye, and US consultancy GeoSigmoid.

According to Africa Intelligence, an agreement signed in Paris in September 2021 with Mr. Ojuroye’s Emirati-registered firm Clayhall Group reserves the company two oil blocks in exchange for the prefinancing of geological surveys by GeoSigmoid. In a letter addressed to the Minister last year, Mr. Ojuroye stressed the “necessity and urgency” of proceeding with a separate, restricted tender to concretize the deal.

The secret agreement makes a mockery of Mr. Budimbu’s global communications campaign to promote the auction as transparent, the NGOs maintain. The Minister failed to mention it in any of his numerous press conferences, media interviews or tweets. 

According to official minutes, on 20 May 2022 Mr. Budimbu updated the Council of Ministers on the pre-financing agreement, without revealing the clause reserving oil blocks for Clayhall. GeoSigmoid had presented preliminary data of sixteen oil blocks to the Prime Minister earlier that month.

One of the two blocks that Mr. Ojuroye reportedly expects to be awarded, block 23, lies in the heart of the peatland-rich Cuvette Centrale, a carbon bomb at the centre of the world’s attention since its mapping in 2017. 

Congolese law permits restricted oil tenders, but the public procurement law’s condition – the “specialised” nature of the services required – would hardly be propitious for the firm of an online betting tycoon.

The demand to cancel the oil auction and investigate the secret trade-off is made by Congolese NGOs AICED, Dynamique Pole, IDPE, MJPE, and REDD, as well as international NGOs 350.org, Banktrack, Greenpeace Africa, Oil Change International and Rainforest Rescue. It comes five days after Mr. Budimbu announced new deadlines for companies to file expressions of interest, officially to give them more time to prepare their bids.

The President of the National Assembly, Christophe Mboso, must:

  • put in place a parliamentary committee to investigate the Oil Minister’s secret agreement with Chukwuma Ayodeji Ojuroye.

President Félix Tshisekedi must:

  • order his Minister to publish the full agreements with all supporting companies;
  • immediately intervene to cancel the auction.
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NATO press South Korea to provide arms to Ukraine

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Image source: NATO

NATO Secretary-General Jens Stoltenberg urged South Korea to provide military support to Ukraine, saying the country is in urgent need of ammunition, stresses “The Wall Street Journal”. Mr. Stoltenberg met with South Korean President Yoon Suk Yeol. After the meeting, Mr. Yoon promised to provide continued support to Ukraine, without saying whether Seoul would consider sending arms.

NATO is calling on South Korea to supply Ukraine because it is a U.S. ally with substantial capability to provide weapons, said Cha Du-hyeogn, a research fellow at Asan Institute for Policy Studies in Seoul. It means that NATO efforts are no longer enough.

While not a member of the North Atlantic Treaty Organization, South Korea is a close U.S. ally, and Mr. Yoon attended the NATO summit last year in Madrid. South Korea has sent materials such as gas masks, bulletproof vests and medical supplies to Ukraine, but has declined to provide lethal weapons, citing a law that prevents it from arming countries engaged in conflicts.

South Korea has been supplying arms to countries that have been supporting Ukraine in the war, including NATO member Poland. Seoul has signed deals to provide Poland with tanks and aircraft since the start of the war.

But, Seoul has sought to tread carefully with Russia, which is a large energy supplier to South Korea and holds sway with North Korea.

Mr. Stoltenberg in Seoul called North Korea’s nuclear-weapons development and missile tests grave threats that violate United Nations Security Council sanctions.

Pyongyang called Mr. Stoltenberg’s visit to South Korea and Japan a “prelude to confrontation and war,” saying it could bring a new Cold War to the Asia-Pacific region, according to North Korean state media.

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