Nicaragua : Pension Reform Proposal

World Bank

关键词: PENSION REFORM;    SOCIAL SECURITY SYSTEMS;    PAY-AS-YOU-GO SYSTEMS;    TAX EVASION;    FINANCIAL LOSS;   

RP-ID  :  19669

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The study reviews the current socialsecurity system, and its characteristics, analyzing theshortcomings of the Old Age, Disability and Survivor'sInsurance (IVM) system, based on a defined benefitPay-as-you-go (PAYG) scheme, no longer viable, given its lowpayroll taxes, overly generous benefits, and high rates ofevasion, all systemic problems, which combined withinstitutional, and administrative weaknesses of theInstituto Nicaraguense de Seguridad Social (INSS), caused acash deficit since 1997, and depletion of its reserves forthe immediate future. The report explores long termfinances, and the rationale for undertaking a systemicreform with mandatory, and defined contributions, based onindividual capitalization accounts. It recommends closingthe current PAYG system to new entrants, with the provisofor those aged 45-50, to opt for the new system, grantingrecognition for their acquired rights. General revenues,payroll taxes, and pension fund reserves, or other possiblesources, should finance the transition to the new scheme, tobe administered by pension fund managers. Funds should beinvested both domestically, and abroad, ensuringdiversification of the portfolio, as well as protection fromlocal economic, and political manipulation.