A roundup of international news covering recent developments on pensions, by Anne Bennett
The Swiss government has produced a report on the future of the mandatory second pillar pension system. A key discussion point is the conversion rate used to calculate annuities at retirement, which is subject to mandatory periodic review. The current rate of 6.8% is already scheduled to be reduced to 6.4% by 2016 and the report argues for an earlier and or increased rate of reduction to ensure long term solvency. Other areas of discussion include an increase in the retirement age, a more flexible method for calculating future liabilities and a "solidarity rescue fund" for Pensionskassen needing financial help. The report also covers administration and investment fees, the minimum interest rate, the decision making structure for key issues, the overall size of the sector (currently consisting of 2,000 Pensionskassen) and interaction with the first pillar. There is a consultation period until 5 March 2012 to allow comments from interested parties.
Dutch statistics show a significant rise in the average age at which employees take retirement and a fall in early retirement before the age of 60, particularly among public sector workers. The figures reveal an increase in average retirement age from 61 in the 2000 to 2006 period to 63.1 in 2011. The rise is largely attributed to specific measures introduced in 2006 to discourage early retirement. The proportion of employees who retire at 65 or later has risen from 15% in 2006 to 30% in 2011. Retirement before the age of 60 has fallen over the same period from 28% to 6%. The official retirement age in the Netherlands is 65, with agreement by Parliament in principle for this to rise in stages to 67 by 2025.
The Canadian prime minister has spoken out strongly in a speech at the World Economic Forum in Davos of the need for a fundamental review of the Canadian pension system. Stephen Harper has asserted the need to review the basic state pension (Old Age Security – OAS) in light of demographic pressures. He stated, however, that current pensioners will not be affected and that there is no need to cut back the mandatory second pillar Canadian Pension Plan. Key areas for review would be the retirement age, the benefits indexation basis and the means testing threshold above which benefits are reduced.
Author: Anne BennettAnne Bennett is a retirement senior associate at Mercer