Pension Schemes -Pay as You Go Schemes
CHAPTER TWO
INTRODUCTION.
According to Robert Palacios (2006), civil servants and other public-sector employees — in the military, education, publicly owned enterprises etc. were often among the first groups of workers to be covered by government-sponsored pension schemes. In a handful of countries such as Bangladesh, Bhutan, Botswana, Eritrea, Lebanon and the Maldives public-sector employees are still the only group covered by a formal pension scheme.
The rationale for providing pensions for government employees was somewhat different from that behind the creation of national pension schemes. Among the objectives particular to schemes for government workers were the following:
• securing the independence of public servants;
• making a career in public service attractive;
• shifting the cost of remunerating public servants into the future; and
• retiring older civil servants in a politically and socially acceptable way.
When mandatory pension coverage was expanded to the private sector, there often seemed little point in including civil servants — who already had their own arrangements — in new national schemes. Civil servants have also proved powerful in protecting their own financial interests. Furthermore, while civil-service pension schemes share some of the social-policy goals of national pension programmes, they must also accommodate the government’s human-resources policy as an employer. For these reasons, special retirement-income schemes for the public sector have often persisted. The issue of ‘dualism’— whether civil-service schemes are integrated with national schemes covering private sector workers or are separate — is a central policy question in those countries where parallel systems remain.
According to Gordon L. Clark (2005), increased longevity and the imminent retirement of the post-war baby-boom generation have undermined the financial viability of state pensions based on Pay- As-You-Go (PAYG) principles. Funding pensions from the
INTRODUCTION.
According to Robert Palacios (2006), civil servants and other public-sector employees — in the military, education, publicly owned enterprises etc. were often among the first groups of workers to be covered by government-sponsored pension schemes. In a handful of countries such as Bangladesh, Bhutan, Botswana, Eritrea, Lebanon and the Maldives public-sector employees are still the only group covered by a formal pension scheme.
The rationale for providing pensions for government employees was somewhat different from that behind the creation of national pension schemes. Among the objectives particular to schemes for government workers were the following:
• securing the independence of public servants;
• making a career in public service attractive;
• shifting the cost of remunerating public servants into the future; and
• retiring older civil servants in a politically and socially acceptable way.
When mandatory pension coverage was expanded to the private sector, there often seemed little point in including civil servants — who already had their own arrangements — in new national schemes. Civil servants have also proved powerful in protecting their own financial interests. Furthermore, while civil-service pension schemes share some of the social-policy goals of national pension programmes, they must also accommodate the government’s human-resources policy as an employer. For these reasons, special retirement-income schemes for the public sector have often persisted. The issue of ‘dualism’— whether civil-service schemes are integrated with national schemes covering private sector workers or are separate — is a central policy question in those countries where parallel systems remain.
According to Gordon L. Clark (2005), increased longevity and the imminent retirement of the post-war baby-boom generation have undermined the financial viability of state pensions based on Pay- As-You-Go (PAYG) principles. Funding pensions from the