The crisis of modern pension systems and social insurance...

Crisis of Modern Pension Systems and Social Security Systems

Distribution systems were created in the 1950s and 1970s. in the more favorable demographic situation of the post-war boom of childbearing and in the current situation do not cope with the consequences of the worldwide trend towards aging of the population. At the same time, the financial crisis of 2007 demonstrated that, in the absence of the necessary measures to protect income and social security programs, it is the elderly that become extremely vulnerable with a significant drop in GDP, a reduction in wages and an increase in unemployment.

Historical excursion

In terms of the level of guarantees provided to the population, all the social protection systems existing in the developed countries of the world can be divided into two groups: German (Bismarck) and English (Beveridge).

The first system, called the bismarck's (after its founder, Chancellor Bismarck), establishes a rigid link between the level of social protection and the success (duration) of professional activity.

Social rights are determined by those deductions that are paid throughout the active life, i.e. social payments take the form of deferred income (insurance contributions). Insurance funds managed on a parity or divided basis by employers and employees (entrepreneurs and employees) collect salary deductions from which various professional insurance funds are formed and social payments are made.

Responsibility for the financial condition and safety of funds are borne by the boards of funds (funds). It is assumed that they should not be subsidized from budgets of any level, since the tax redistribution implemented on the basis of the budget approach contradicts the logic of labor (insurance) participation.

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For families with inadequate opportunities for labor participation, there is national solidarity through municipal services, or charity.

The second system, which is called the "Beveridge" ( Beveridge ) proceeds from the premise that any person, regardless of his/her belonging to the active population, has the right to minimum protection from illness, old age or other reasons for the reduction of his labor opportunities.

In countries that have chosen this model, compulsory sickness insurance systems operate, and pension systems provide a minimum income for all the elderly, regardless of the level of deductions from wages (the so-called "social pensions", as opposed to "professional" ;).

Such social protection systems are financed by taxes from the state budget. In this case, the principle of national solidarity prevails, the concept of distributive justice.

Bismarck's and Beveridge models have different variations.

The most stable in the world practice is used liberal, social democratic and conservative models.

The Social Democratic model is based on the basic principles of the Scandinavian or Nordic model. The main thing here is universalism. It means that social protection is the right of all citizens, provided mainly by the budget.

This model is based on a high, stable level of labor productivity, strong trade unions, contractual relations between employers and employees who are controlled by the state.

At the same time, the public sector finances social policy through the taxation system and is responsible for the functioning of various social services. An important component of the model is compulsory insurance.

Conservative model ( continental ). The central principle of the conservative model is the emphasis on the market and insurance under state supervision. In this model, mainly labor determines the subsequent social security. The country where the principles of the conservative model are most fully realized is Germany, which was the first in Europe and in the world to introduce an insurance system.

The retirement age was first determined in 70 years with 30 years of seniority. Disability pensions were awarded in the event of a loss of 2/3 of working capacity. The financing was provided through insurance premiums paid by the insured and employers in equal shares, as well as state subsidies, for which Bismarck was called a socialist.

At the beginning of the XX century, the development of insurance led to a decrease in the retirement age to 65 years (the norm that still applies today). However, due to economic instability, the size of pensions was very small. A certain ratio between pensions and the growth of incomes of workers was established in the 1950s, which increased the welfare of pensioners. The insurance system was gradually reformed, and the pension reform of 1992 established uniform standards for all territories of the united Germany.

First, it provides social security of the residual type. It is assumed that people can exist in society and without social security.

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Secondly, the government has a certain responsibility for the social security of citizens. Due to the residual nature of the financing, the implementation of the model depends on the availability of a large amount of voluntary and informal assistance.

The classic countries of the liberal model are the United Kingdom and the United States.

The American social security system is based on two main forms:

• social insurance, payable by both employers and employees;

• State social assistance from the budgets of various levels (from federal to local).

The main criterion of social assistance is poorness, poverty. The criteria for neediness vary by state, and the allowance does not reach the subsistence level. At the same time, each needy can get help on several programs at once: municipal housing + food stamps + medical assistance. This allows us to sufficiently fully and flexibly take into account the needs of different groups.

The main factor in global changes in pension systems in virtually all countries of the world has been an increase in the life expectancy of people. The aging of the population will lead to a decrease in supply in the labor market and a decrease in the rate of economic growth.

Life expectancy in America, Europe and Japan is growing approximately the same, but the situation in pension systems is very different. Unlike most countries in Europe and Japan, where the working-age population will decline in the current decade (in Western Europe - by an average of 0.3%, and in Japan - by 0.7% per year), in America, thanks to much more high fertility, it will grow a little. The burden of pension payments in America will be borne by far more workers than in Europe. According to the UN forecast, by the age of 65 people aged 65 and over will be 60% of the working-age population of Germany and 62% of Italy, while in the USA the share of the elderly will reach only 35%.

Russia in the rate of decline of the able-bodied population in the next 15 years (about 1% per year) will be in the top ten countries. But the United States "aging" is less deep and different in composition of the elderly population, in comparison with Europe and Japan, since it leads mainly to an increase in the number of pensioners younger, not older. The life expectancy for United Statess aged 60 years is now 17 years, while for Western Europe - 23 years, and for the Japanese - 25 years. In the coming decades, United States indicators will gradually be pulled up to the current level of Western Europe and Japan, while in these countries the expected life expectancy of pensioners will continue to grow. Therefore, even in 2050, the share of United Statess over 80 will be, according to the UN forecast, only 6% of the total population. For the developed countries, a preponderant growth in the number of pensioners over 80 is typical. For example, in Japan, their share in the population has almost doubled in the last 10 years, again doubled by 2030, and by 2050 will be over 15% of the total population. In Germany and Greece by 2050 the share of such people in the population will almost triple. In all these countries, their share in the total number of pensioners will exceed 1/3 (Figure 13.1).

Practice questions

The clearest indicator of demographic changes is the median age, a sort of equator dividing the population in half. In 1950, half of humanity was made up of people younger than 24 years. Indeed, at that time childhood and youth prevailed on the Earth. Today you will say this, but in 2050, especially: in 2012, the median age of mankind was about 30 years (in developed countries - all 40), and by 2050 it will reach 38 years.

The share of people in 60 today ranges from 1% in the UAE to 32% in Japan (in 2050, Japan will lead with a 41% result). In Europe, Italians and Germans are ahead - 27% each. Another 31 European countries crossed the threshold of 20%. But it would be a mistake to consider that the aging of the population is a problem of only developed countries. This is a worldwide trend, it's just that with well-off and Western ways of living, it manifests itself earlier and stronger. However, in underdeveloped countries, demographic aging is also accelerating, and by the middle of the 21st century, they will approach the indicators of developed countries (20% of residents over 60, including 3.5% - over 80 years old).

Percentage of the population of European countries over 60, the turn of the 20th-21st centuries.

Fig. 13.1. The proportion of the population of European countries older than 60, the turn of the XX-XXI centuries.

In the 1980-1990's. the state policy in the field of pension expenditures was based on raising the retirement age, which reduced the number of young pensioners who had enough strength to continue working. As a result, in most of these countries, the standard retirement age is now 65 years or more. But further raising the retirement age will not help. The number of those pensioners who are no longer able to work due to age restrictions is growing. According to the European Commission, more than half of retirees over 80 years in the EU have at least one restriction in the performance of a vital function. The consequence of this was an increase in the additional costs for social services, medicine and pensions. It is also worth noting that life expectancy forecasts are of an inertial nature and do not take into account medical discoveries that can increase the life span spasmodically (Table 13.2).

The increase in pensions will be, by 2050, an average of 3% of GDP in developed countries, and 2.2% of GDP in developing countries. At the same time, Russia (in a group of 22 countries) is on the second place after Ukraine, with the growth of pension expenditures well above the average (growth is projected at 9% of GDP). Reform of public distribution systems is on the agenda in most countries, and the crisis only gave it additional acceleration.

Table 13.2

Demographic trends in leading developed countries, the population in 1995 is 100%

Description

1995

2000

2010

2020

2030

2050 g.

USA, population

100.0

104.8

113.0

119.8

124.7

172.2

US Demographic Load

19.2

19.0

20.4

27.6

36.8

38.4

Japan, population

100.0

101.3

102.2

100.6

97.6

91.6

Japan, Demographic Load

20.3

24.3

33.0

43.0

44.5

54.0

Germany, population

100.0

100.0

97.2

94.2

90.6

81.2

Germany, Demographic Load

22.3

23.8

30.3

35.4

49.2

51.9

France, population

100.0

102.2

104.9

106.9

107.8

106.1

France, Demographic Load

22.1

23.6

24.6

32.3

39.1

43.5

Italy, population

100.0

100.1

98.2

95.3

91.9

82.6

Italy, Demographic Load

23.8

26.5

31.2

37.5

48.3

60.0

Great Britain, population

100.0

101.0

102.2

103.5

103.9

102.0

UK, Demographic Load

24.3

24.4

25.8

31.2

38.7

41.2

Canada, population

100.0

105.0

113.2

119.7

123.1

122.7

Canada, Demographic Load

17.5

18.2

20.4

28.4

39.1

41.8

Sweden, population

100.0

101.8

103.8

105.7

107.0

107.0

Sweden, demographic load

17.4

26.9

29.1

35.6

39.4

38.6

All European countries face a choice: to increase taxes and social insurance contributions or to reduce state pensions (Figure 13.2).

However, the maximum rates in the leading countries are still at a rather high level. The forecasts of demographers show that in the next 50 years the age structure of the population in European countries will change dramatically in favor of middle and older ages. Thus, according to the updated UN forecast, by 2030, on average, the proportion of people over the age of 65 in the world will be about 25%, whereas at present this figure is at the level of 17-18%.

The maximum rate of social taxes and fees from the wage fund levied on employers, 2011

Fig. 13.2. The maximum rate of social taxes and fees from the wage fund levied on employers, 2011

By 2050, 37% of the continent's population will be elderly. A study conducted by the European Commission indicates that the impact of negative demographic changes can be mitigated, on average, by 47% due to measures such as changing the retirement age and the size of pension payments by reviewing the rules for assigning and indexing pensions and increasing the retirement age (Table 1). 13.3). In many countries in 2011 it was decided to increase the retirement age: in France and Italy - up to 67 years, in the UK - to 68 years, in Germany - to 67 years, etc. But from the point of view of a pensioner, it is not important when he retires, but how many years he will receive it.

Pension system reforms have already begun in Germany, the United States, Italy, France, Hungary, Poland, the Czech Republic, Sweden, Japan, China and other countries (Case 2 "Pension Reform in Japan and China"). They are reduced to various combinations of the following measures:

• smooth increase in retirement age;

• reduction in the value of certain types of pensions;

Table 13.3

Retirement age, 2011

Country

Retirement age, years

Average life expectancy, years

Men

Women

Japan

70

70

82.1

Denmark

67

67

78.3

Norway

67

67

79.9

US

65

65

78.1

Germany

67

67

79.3

Channel

65

65

81.2

Spain

65

65

80.1

Sweden

65

65

80.9

Switzerland

65

64

80.9

Armenia

65

63

72.7

Belgium

65

62

79.2

United Kingdom

68

60

79.0

Italy

67

65

80.2

Poland

65

60

75.6

Georgia

65

60

76.7

France

67

65

81.0

Kazakhstan

63

58

67.9

Lithuania

62.5

58.5

74.9

Hungary

62

62

73.4

Czech Republic

62

62

76.7

Azerbaijan

62

57

66.7

Moldova

62

57

70.8

Russia

60

55

66.0

Ukraine

60

55

68.6

Belarus

60

55

70.6

Uzbekistan

60

55

72.0

• increase in the size of insurance premiums and insurance periods;

• isolation of insurance and social assistance institutions;

• limiting the practice of early retirement;

• stimulating the creation of private pension funds.

However, in the presence of such obvious positive aspects of conditional accumulative pension systems, they also have shortcomings, the most important of which is the lack of redistribution mechanisms within a single generation in favor of the poorest insured: with low wages or for the benefit of disabled people. Therefore, conditional-funded pension systems are supplemented by other pension institutions that are designed to provide minimum income guarantees to older persons and disabled people, usually at the expense of total budget revenues.

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