Contenu du sommaire : Le financement de la retraite

The analysis framework of pension system reforms The analysis framework of pension system reforms enters upon the multiple views of the economic argumentation that articulates the thoughts on the terms of pension reforms. It allows to point out the complexity of the decision process and the successive trade-offs taken by the governments to bring reforms to an end. Four topics are examined : the link between the main demographic evolutions and the regulation of pension schemes, the main economic debates, in particular the question of « privatization » of the public pension schemes, the organisation of pension schemes to share and mutualize the income risks, the objectives and the principles of the pension system reforms. JEL classification : H55, J26

Restoring equilibrium in pension systems : an analytical presentation We analyze the four main possibilities for restoring equilibrium of pension schemes in front of future demographic changes. Relying exclusively on a downward adjustment of pensions would imply a very large reduction of pensioners' relative standard of living. Relying exclusively on increases of contributions seems more realistic, but this would be at the expense of other social needs, and the neutrality of such a policy for employment levels cannot be warranted. Funding consists in anticipating requested financial efforts : its only advantage is that this financial effort will be lower in the long run, if returns on capital are permanently higher than economic growth. Raising the retirement age, at last, would be a logical answer to an increasing life expectancy, bur relying exclusively on this tool would, once again, imply a very large adjustment. On the whole, the answer to demographic changes will, probably, require a mix of these four instruments. JEL classification : D3, H55, J22, J26

Increasing the retirement age : a needed and equitable reform This paper argues that increasing the retirement age is a policy that is both needed for the financial viability of social security system and equitable from the viewpoint of low productivity workers. It also shows that the political unpopularity of such a reform comes from a deep misunderstanding as to the actual alternatives that society faces. JEL classification : D3, H55, J26

Actuarial fairness, an elegant concept but tricky to be implemented Actuarial fairness of PAYG pensions systems is often seen as a way to provide workers incentives to delay their retirement decision. If introducing it at the margin is a good idea, it cannot be substituted to a reform of the system, as thought must still be given about pivot age, as well as about financial equilibrium and replacement rates. As for a pure actuarial scheme, it raises problems for redistribution and equity both within and between generations. JEL classification : H55, J22, J26

Retirement, successive generations and social fairness As far as pensions are concerned, fairness is sometimes defined as equality of income between retired and working individuals, or between successive generations, or else as actuarial neutrality of pensions and contributions. None of these criteria is convincing, and instead of introducing fairness as a constraint, flexible social objectives which incorporate notions of fairness can be formulated. This leads to give some priority to the worse off, and determined on their individuals' preferences regarding their own social and economic situations (income, uncertainty, activity, health...). As a consequence of this approach, a sustainable development should be strived, and focus on the worse off social subgroups in the current generation. JEL classification : D3, H55, J26

Solidarity in the retirement system Solidarity can be defined as the obtaining of rights out of proportion to the paid contributions or without contributions. Two sorts of solidarity can be distinguished : the first is « global », the second is « targeted ». The first deals with two notions : - a « national » solidarity that concerns ail persons with shared interests and which is linked with a public pension schemes ; - a « pension scheme » solidarity to maintain an income for retired. The « targeted » solidarity favours special socio-professional groups. After the presentation of sorts of solidarity, the problems of financing retirement system are explained. At last, authors present quantitative elements for measurement of these sorts of solidarity. JEL classification : H55, J26

Financing long-term care : some lessons from Germany The purpose of this paper is to evaluate, with regard to the distinctive features of risk, the three main characteristics of the methods for financing long term care in Germany, which resulted from laws voted in 1994 and 1996 : the choice in favour of social insurance financed by contributions based on gross individual earnings with a mandatory private insurance at the same time for those with earnings above the ceiling of social contributions ; a mix of financing systems at the macroeconomic level with a predominant pay-as-you-go scheme, completed by private insurance companies ; the link between the investment in human capital and the contribution to financing, a link to be finally established in the near future following the recent judgement of the federal constitutional Court in Germany. The paper will attempt to extract lessons - some general, others dealing with specific instruments - which prove useful for reflecting upon the French situation. JEL classification : C23, H55, J26

Pension reserve funds for retirement in different countries Many countries (Ireland, New Zealand, Netherlands, Spain, Portugal, Norway) have recently created pension reserve funds, to prefund a part of liabilities of their pay-as-you-go public pension schemes. Other countries (Sweden, Finland, Japan, Canada, United States), long since having accumulated reserves, have changed the financial management rules, to improve the allocation of investments and to increase the return. Accumulation of reserves in pay-as-you-go schemes and optimisation of their financial management become preponderant components in the process of pension reforms. The panorama of these experiences shows a big diversity of national practices, as for the objectives of the pension reserve funds, the amount and the nature of financial resources directed to the funds, the methods of financial management. JEL classification : C23, H55, J26

The pension fund directive and the financial markets integration The changes in our welfare plans require financial markets integration. So, the development of alternative pensions' financing - occupational retirement provision or individual retirement - is inescapable. The directive on institution for occupational retirement provision must be analysed in this framework. This measure and those contained in the Financial services action plan (FSAP) are indissociable. This article deals with the analysis of the European pension fund directive in the financial market integration's framework. JEL classification : F36, C23, H55, J26

The European pension management industry This paper seeks to assess the current status and future prospects for private pension management in Continental Europe, with a particular focus on the nature of competition among managers of pension assets. It is shown that the pension fund sectors are relatively small and the industry to date has tended to be oligopolistic and segmented on a national basis. This situation has tended to lead to higher prices and lower returns than could otherwise be obtained. Regulatory, fiscal and demand-side differences are at the time of writing holding-back a Pan European asset management market, despite three years of EMU. Nevertheless, future pressures are likely to induce greater competition, notably on a cross border basis. These include not only evolving effects of EMU itself but also the indirect effects on asset management via banking, EU Directives and the further pressures for pension reform. JEL classification : C22, C23, H55, J26

The pension fund balance sheet Pensioners' saving represents between 10 or 20% of their income during their active period. But the French debate on pension funds concerns only equity capital needed by firms or sustainable development. This article tries to explain the asset-liabilities reasoning of retirement funds. The author illustrates this reasoning in the fixed pension or fixed subscription regimes' framework. He concludes with some reflections about mixed systems like the French pension reserve fund. JEL classification : C23, H55, J26

From the viewpoint of the euro what has gone well, or what has not gone well in Europe during the past few years ? To answer this question, the author explains a very sketchy historical and why the process leading up to EMU played a major part in steering the policies of prospective member governments and central banks in the right direction. He analyses how the pegging of the conversion rates and the changeover to the single currency was a success. At last, he deals with the interesting question about the stimulating influence of the euro on the development of the single market for goods, services and capital and explains his concern about the « economic » part of the EMU. JEL classification : E42, F3, F36

The future role of the euro in the international arena If the euro has boosted European financial markets by reducing barriers to cross-border transactions, thus encouraging the emergence of a pan-European money market and a corporate bond market there can be no doubt that for assets denominated in euros, we are still a long way from the sort of liquid, efficient and active international markets that exist for the dollar. On the foreign exchange markets, the emergence of the euro has not really changed the relative position of the former European currencies vis-à-vis the dollar and the yen. And the shares in official reserves of Central Banks have also remained fairly stable What of the future ? Three major issues arise : - do Europeans want the euro to become an international currency ? - Is the euro capable of establishing itself in such a position ? - If the euro did win international status for itself, would that help to improve the stability of the international monetary system ? JEL classification : E42, F3, F36

Sound money and deep markets : Europe after the euro Contrarily to initial expectations, the Euro has not displayed much strength, as a currency backed by a stability oriented policy and an independent central bank. Although the initial decline of the Euro against the dollar has stopped, and the European currency now seems more stable, most analysts consider it significantly undervalued. A lot has been said and written about the value of the euro, including many accusations - often contradictory - with respect to Europe's disappointing economic policy and lack of dynamism, the inability of the ECB to act decisively or the ambiguity of the monetary policy stance. This article highlights the elements explaining why the European and the USA financial markets are clearly at very different levels of development and sophistication. JEL classification : E42, F3, F36, G1.

The euro as an international currency This article explains some of the basic considerations that confront the euro in its emergence as a key international currency. An international currency emerges because it is a solution to an economic problem : cross-border transactions. Because the attractiveness of any vehicle currency grows as its liquidity increases, an international currency has a tendency to become a natural monopoly. But the important factor inhibiting the emergence and persistence of a single vehicle currency throughout the world is the attraction of portfolio diversification. So, this article tries to explains how a currency become an international currency. JEL classification : E42, F3, F36

The euro in international financial markets : where do we stand ? In evaluating the international role of the euro, this article adopts a portfolio balance framework. The international weight of a currency is measured by the extent to which it inspires the trust of international asset managers as a store of value. As a consequence, medium to longer-term fluctuations in the value of the currency will be determined by the balance between the demand for assets and the supply of liabilities denominated in that currency. The note examines first the international issuance patterns in the euro and compares them to those of the US dollar. It then focuses on the patterns of international portfolio flows between the euro area, the United States and Japan. The final section examines the role of the euro in international currency markets. It uses the results of the most recent BIS triennial foreign exchange rate survey to compare the role of the single currency to that of its predecessors and the other major world currencies. JEL classification : F3, F36.