Nicaragua : Pension Reform Proposal

Nicaragua : Pension Reform Proposal

The study reviews the current social security system, and its characteristics, analyzing the shortcomings of the Old Age, Disability and Survivor's Insurance (IVM) system, based on a defined benefit Pay-as-you-go (PAYG) scheme, no longer viabl...

Full description

Bibliographic Details
Main Author:	World Bank
Language:	English
Published:	2013
Subjects:	PENSION REFORM SOCIAL SECURITY SYSTEMS PAY-AS-YOU-GO SYSTEMS TAX EVASION FINANCIAL LOSS FINANCIAL MANAGEMENT INFLATION LABOR MARKETS INVESTMENT RETURNS INDIVIDUAL RETIREMENT ACCOUNTS REGULATORY FRAMEWORK ADMINISTRATIVE ARRANGEMENTS SOCIAL COSTS INVESTMENTS PENSION INSURANCE PENSION VALUATION SOCIAL ASSISTANCE PROGRAMS CONTRIBUTIONS PUBLIC AWARENESS ADMINISTRATIVE COSTS ADVERSE SELECTION AFFILIATES BANKING SECTOR BANKING SUPERVISION BANKRUPTCY BENEFIT FORMULA BENEFIT RATE BIDDING PROCESS CAPITAL MARKETS CAPITAL REQUIREMENTS CAPITALIZATION COMMERCIAL BANKS COMPETITIVE BIDDING CONTRIBUTION BASE CONTRIBUTION RATE CONTRIBUTION RATES CONTRIBUTION RECORDS DEBT DEFICITS DEFINED BENEFITS DEMOGRAPHIC TRANSITION DEPENDENCY RATIO DEPOSIT INSURANCE DISABILITY EXCHANGE RATE EXPENDITURES EXTERNAL AUDITORS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL STABILITY FISCAL YEAR FOREIGN EXCHANGE FRAUD HEALTH CARE HUMAN DEVELOPMENT INCOME INCOME GROUPS INDEXATION INFORMAL SECTOR INSURANCE COMPANIES INSURANCE INDUSTRY INSURANCE MARKETS INSURANCE PREMIUMS INTEREST RATES INVESTMENT RETURN LABOR FORCE LEGISLATION LIFE INSURANCE MANDATORY SYSTEM MARKET DISTORTIONS MATERNITY LEAVE MINIMUM BENEFIT MINIMUM WAGES MORAL HAZARD NEW ENTRANTS NORMAL RETIREMENT AGE OLD AGE INSURANCE PAYROLL TAX PENALTIES PENSION AGENCY PENSION COVERAGE PENSION FUND PENSION FUND MANAGEMENT PENSION FUND MANAGERS PENSION LIABILITIES PENSION PLAN PENSION RIGHTS PENSION SYSTEM PENSION SYSTEMS PENSIONERS PENSIONS PRESENT VALUE PRIVATE BANKS PRIVATE PENSION PRODUCTIVITY PROGRAMS REPLACEMENT RATE REPLACEMENT RATES RESERVES RETIREES RETIREMENT RETIREMENT AGE SAVINGS SOCIAL ASSISTANCE SOCIAL INSURANCE SOCIAL SECURITY SOCIAL SECURITY PROGRAMS SOCIAL SECURITY SYSTEM SOLVENCY STRUCTURAL ADJUSTMENT SURVIVORS INSURANCE SUSTAINABILITY TAX RATES VICTIMS WAGES WORKERS COMPENSATION
Online Access:	http://documents.worldbank.org/curated/en/2000/04/728790/nicaragua-pension-reform-proposal http://hdl.handle.net/10986/14972

Description
Summary:	The study reviews the current social security system, and its characteristics, analyzing the shortcomings of the Old Age, Disability and Survivor's Insurance (IVM) system, based on a defined benefit Pay-as-you-go (PAYG) scheme, no longer viable, given its low payroll taxes, overly generous benefits, and high rates of evasion, all systemic problems, which combined with institutional, and administrative weaknesses of the Instituto Nicaraguense de Seguridad Social (INSS), caused a cash deficit since 1997, and depletion of its reserves for the immediate future. The report explores long term finances, and the rationale for undertaking a systemic reform with mandatory, and defined contributions, based on individual capitalization accounts. It recommends closing the current PAYG system to new entrants, with the proviso for those aged 45-50, to opt for the new system, granting recognition for their acquired rights. General revenues, payroll taxes, and pension fund reserves, or other possible sources, should finance the transition to the new scheme, to be administered by pension fund managers. Funds should be invested both domestically, and abroad, ensuring diversification of the portfolio, as well as protection from local economic, and political manipulation.

Cannot write session to /tmp/vufind_sessions/sess_l9jrtgqmepompp8l13p39gqfke