The lack of a secure income in older age is one of the biggest problems facing people in developing countries. Few people in poverty can afford to save for older age and family support for older people is under pressure. Around the world, the majority of older people lack a secure income, and fewer than one in five people over 60 receive a pension. The best way to tackle this problem is for governments to provide non-contributory (‘social’) pensions, as more than 80 governments around the world have done including Nepal, Bolivia, South Africa and Brazil.

In light of the consequence of ageing populations in virtually all countries and increasing government debt in many countries, retirement income systems are coming under greater scrutiny than ever before. Notwithstanding the great diversity of policies towards pensions around the world, it is important that comparisons are made and lessons are learned from the range of approaches. This report presents such research and compares retirement income systems in 16 countries, representing more than half the world’s population.

This is the sixth edition of the Pensions Universe Risk Profile (The Purple Book), a joint annual publication by the Pension Protection Fund (the PPF) and the Pensions Regulator (the regulator) which focuses on the risks faced by defined benefit (DB) pension schemes, predominantly in the private sector.

This paper studies optimal unemployment benefit levels and optimal proportional income tax rates over the business cycle. Previous research suggests that policy makers should make unemployment insurance (UI) dependent on the business cycle because the UI system can be used to smooth consumption across different economic states. However, high benefits increase unemployment. An alternative way to redistribute income is to vary tax rates over the business cycle.

The current generation of workers can expect lower pension benefits in retirement than the current generation of pensioners. Private, voluntary pension savings will therefore play a greater role in providing for old age. This paper calculates the size of the “pension gap”: the difference between the benefits from mandatory retirement-income provision and a target pension level. It then computes the amount that people would need to save to achieve the target.

The Dutch occupational pension system has been successful in securing high asset accumulation to fund generous pension promises. However, for the second time in this decade the pension system has been affected by a financial crisis and many pension funds’ assets fell below levels needed to meet regulatory requirements. Insufficient funding raises solvency issues, which could eventually lead to large fiscal costs in case of bail-outs.

The world of defined contribution (DC) pensions is changing. The introduction of auto -enrolment will result in the number of people saving in DC schemes rising dramatically. As a result of the Government’s workplace pension reforms it is expected that 5 to 8 million people will be newly saving or saving more in all forms of workplace pension scheme. DC provision will be at the forefront of efforts to give people the dignity and security in retirement they expect. To maximise the benefits of auto- enrolment, it is important that members have confidence that they are saving into durable products that can deliver good outcomes.

Using a novel dataset from the 2006 Portuguese Labor Force Survey this paper examines the impact of a voluntary reduction in hours of work, before retirement, on the moment of exit from the labor force. If, as often suggested, flexibility in hours of work is a useful measure to postpone retirement, then a reduction in working hours should be associated with retirement at later ages. Results prove otherwise suggesting that reducing hours of work before retirement is associated with early exits from the labor force. A reduction in hours of work seems to signal the worker's wish to retire sooner rather than to announce the desire of remaining in the labor market. This result may enclose the need for some alternative policy strategies regarding working hours.

Social Security Disability Insurance (SSDI) applica-tions and benefit receipts vary greatly by state, which has led to concerns about potential inconsistencies in the way that states apply disability standards.1 An earlier brief concluded that more than 70 percent of the variation across states in SSDI application rates is explained by state health, demographic, and employment characteristics; state policies and politics explain very little.2 Another concern has been the growth in the SSDI program over time. This brief uses the same data as the earlier analysis to answer a related ques-tion: How much of the trends in SSDI application rates within states can be explained by the different factors?

Policymakers have designed Social Security to be a progressive retirement program that replaces a larger share of monthly earnings for low- and middle-income workers than for high earners. However, previous research has found that, although the Dis-ability Insurance (DI) component of Social Security is very progressive, the Old-Age and Survivors Insur-ance (OASI) component may be less progressive than intended. One reason is that high earners tend to live longer than low earners. Since Social Security pays an annuity that lasts throughout retirement, it benefits high earners with greater longevity.

This paper reviews the public pension schemes and the pension models used for the projections carried out by the Economic Policy Committee and the European Commission on age-related expenditure in 2005. The pension schemes are described as they were in force in 2005, including the effects of pension reforms enacted by mid-2005 even though the implementation of reforms would occur over a longer period of time.

The UK's pension policy framework is built around voluntary private pension saving, on top of a universal state pension. The voluntary savings pillar involves significant financial incentives to save: there is tax relief on contributions from income, as well as on capital gains in defined contribution plans.