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  #441  
Old 07-23-2019, 05:22 AM
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FRANCE

https://www.bloomberg.com/news/artic...nally-revealed
Quote:
France’s Mother-of-All Pension Reforms Is Finally Revealed

Spoiler:
The pinnacle of Emmanuel Macron’s efforts to modernize France is finally on the table, after nearly two years of preparation.

The French president is pressing on with his campaign promise to gradually merge 42 different public pension systems and encourage people to work longer. His plan was handed to Prime Minister Edouard Philippe on Thursday for consideration.


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Pensions are seen as the mother-of-all reforms in France and several previous governments have backed down in the face of public opposition to their attempts to change it. Macron’s effort comes just as the Yellow Vest protests subside. Still, the plan has risks and CGT labor union chief Philippe Martinez is already planning demonstrations in September.

Under the plan, the minimum retirement age will remain 62 but incentives will be introduced to encourage people to work longer. French contributors will be able to have a full pension at age 64. The calculation of the pension will be based on points gathered throughout an individual’s career.

Some sectors, like the army and the police, will maintain a special system under the plan, which was crafted by the former conservative minister Jean-Paul Delevoye, a 72-year-old veteran of social negotiations.

After today’s presentation it will be discussed further with French labor and business unions and will get a vote in Parliament next year -- probably after the nation-wide mayoral elections in the Spring.

Macron has already simplified labor laws to make them more flexible, scaled back a wealth tax and he changed the national railway status to open the system even more to competition. The government last month proposed changes to France’s unemployment benefits to encourage people to get back to work, while discouraging companies from resorting to short-term contracts.


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  #442  
Old 07-23-2019, 06:32 AM
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BRAZIL
https://seekingalpha.com/article/427...ig-reform-step
Quote:
Brazil Takes Big Reform Step

Summary
Pension funding has been an issue in many parts of the world and has certainly been a hot topic in Brazil.

President Jair Bolsonaro's election ignited market optimism on promises to reform pensions to get Brazil's fiscal house on a firmer footing.

The probability of this being delivered has increased considerably after approval of a new pension reform bill in Brazil's lower Congress.

Franklin Templeton Emerging Markets Equity's Gustavo Stenzel and Marcos Mundim weigh in on what the breakthrough means for the country, and for investors.


Spoiler:
By Gustavo Stenzel, Executive Vice President, Director of Latin America Strategy, Franklin Templeton Emerging Markets Equity; Marcos Mundim, Senior Executive Director, Franklin Templeton Emerging Markets Equity

Brazil's lower house of Congress overwhelmingly approved a landmark pension reform bill this month, a positive step in a process that should substantially shore up the country's fiscal situation. While it still needs a full congressional vote, we think this is a positive development from an investor standpoint.

Brazil's official pension fund system is a mandatory, pay-as-you-go system. As the population grows older, the cost of these pensions is becoming an even bigger burden. The system also has many disparities, such as a separate, more benevolent structure for public servants.

The result has been bigger system deficits. Pensions consume around 45% of federal government budget or 9% of Brazil's gross domestic product (GDP), and the mounting costs of pensions have contributed to a surge in Brazil's public debt from around 50% of GDP in 2013 to 80% today.1 Various governments in the past have tried to overhaul the system, but it's a politically difficult subject, and previous administrations have failed to put in place effective reforms.

Reforming the country's pension system is President Jair Bolsonaro's top priority, and his economic team has prepared a robust and comprehensive reform bill which more aligns the retirement criteria for Brazilians with other countries. The minimum age for retirement was increased to 65 for men and 62 for women, and the minimum number of years of contribution was likewise increased, closing some loopholes.

The reform bill also removes part of the special benefits that public servants are currently entitled to. After intense negotiations in Congress in the past few months and lobbying from the most impacted working classes, Congress finally had its first successful vote on pension reform this month.

A second required vote is expected for early August, and the final vote should take place in the Senate shortly after. Savings from the reform are expected to reach 900 billion real (US$235 billion) over the next 10 years.2

States and municipalities also have an urgent need to reform their pension systems, so if they are not included in the current reform, they will have to do so locally.

An Improving Investment Climate
The approval of the reform should stop the escalation of Brazil's public debt and allow it to start declining in the near future. A more sustainable indebtedness level should create conditions for lower interest rates and attract private investors who may have been on the sidelines because of the political and economic instability of the last few years, which resulted in Brazil's deepest recession in history.

After the approval of the pension system reform, we expect tax reform to come next, along with privatizations and more microeconomic reforms aimed at improving Brazil's regulatory environment.

The government is already carrying out an ambitious privatization program; Bolsonaro has pledged to turn the economy toward more privatization of state-owned enterprises (SOEs), which we think should help fuel more robust job creation. We would anticipate a wave of privatizations, concessions and sale of passive stakes from government entities to come, and the reduced role of government-controlled banks should likely boost capital markets further.

Therefore, from an investment standpoint, we expect a recovery should be felt first in SOEs, along with infrastructure plays, capital markets platforms (e.g., stock exchanges), and other capital-intensive industries.

But Is the Good News Priced in Already?
Brazil's stock market has anticipated part of the economic recovery as the Brazilian Ibovespa index is up 39% in the past year in local currency terms (40% in US dollar terms).3 So a lot of good news is priced in already.

Yet, we remain constructive on the outlook for Brazil's market due to the previously mentioned reasons, and we believe industries with higher exposure to the domestic economy will potentially benefit from further progress.

The immediate result of pension progress should be a restoration of increased confidence in the sustainability of the public debt, and lower country risk. This environment should provide the necessary conditions for the continuation of the government's modernization agenda by attracting private-sector investment and reducing the role of public-sector investment.

While Brazil still faces some challenges, overall we have a very constructive view of the country going forward. There is high pent-up demand after years of poor economic growth and high unemployment. Inflation is low and interest rates are expected to move lower - from what is already an all-time current low of 6.5% in the benchmark Selic interest rate. We think the combination of positive factors should allow many companies' earnings to improve significantly in the coming years.

Additionally, with a lower-interest rate environment, many domestic investors will likely increasingly diversify their investment allocations away from fixed income into equities to achieve better yields. Current domestic investor allocation to equities remains near historically low levels.4

In our view, the important message is that Brazil's economy is back on track - back on a path to recovery and higher sustainable growth. We are hopeful the tide is turning in Brazil.


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  #443  
Old 08-14-2019, 04:52 PM
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CHINA

https://www.eurasiareview.com/130820...owth-analysis/

Quote:
China Puts Pensions At Risk To Promote Growth – Analysis

Spoiler:
As economic pressures on China pile up, the government is orchestrating an awkward two-step response to support sagging growth rates using social security funds.

Under a stimulus plan outlined by Premier Li Keqiang in March, the government has allowed enterprises to reduce their social security contribution rates to 16 percent of workers’ wages from 20 percent previously, starting May 1.

The break, intended to ease “corporate burdens,” is a significant part of the government’s 2-trillion-yuan (U.S. $283-billion) tax-cutting program aimed at promoting economic growth, which slowed to 6.2 percent in the second quarter this year.

By the end of the first half, employers had already saved 128.8 billion yuan (U.S. $18.2 billion) in payments for basic pensions, unemployment insurance and work-related injury coverage, the official Xinhua news agency reported.

Corporate savings are expected to rise to at least 310 billion yuan (U.S. $44 billion) by the end of 2019, said You Jun, vice minister for human resources and social security.



But despite the benefits from bucking up corporate profits, the government arguably could not have picked a worse time to cut contribution rates.

According to Xinhua, China is “attempting to walk a fine line” between boosting the economy and keeping the pension system sustainable.

The problem is that pensions are already underfunded as China struggles with the effects of an ageing population and demographic shifts.

At the end of 2018, China’s over-60 population stood at 249 million, or 17.9 percent of the total, while older citizens are living longer. In Beijing, the average life expectancy among women has risen to 84.63 years, up by over 12 years since 1979, Beijing Youth Daily reported last month.

The figures have sparked fears among younger workers that there will be no benefits for them when they reach retirement age, the Nikkei Asian Financial Review said. The government raised basic pension payments by 5 percent this year.

By the end of June, the total pension insurance surplus was over 5 trillion yuan (U.S. $708 billion), the official English-language China Daily reported, citing figures presented by You. The system was “generally stable,” You said.

The surplus was enough to cover more than 18 months of payments, Reuters quoted You as saying.

Funds running out
But in April, a report by the Chinese Academy for Social Sciences (CASS) projected that pension funds for urban workers would start running deficits in 2028 and become insolvent by 2035.

In July 2018, pension payments were delayed by underfunding in northern China’s Heilongjiang province despite an injection of subsidies, according to a Council on Foreign Relations (CFR) report published by the online international news magazine The Diplomat in March.

The CASS report warned that Qinghai, Liaoning and Jilin provinces would also run out of pension funds this year.

The government’s solution, first announced in 2017 as a pilot program, is to transfer 10-percent shares in state-owned enterprises (SOEs) to the social security funds.

The value of the completed and expected transfers from 59 large and medium-sized SOEs will be 660 billion yuan (U.S. $93.5 billion), the Ministry of Finance said.

You voiced “confidence” that the scheme would achieve the two “guarantees” that enterprises would get their social security contribution cuts and that pensions “would be paid on time and in full.”

But others see a slew of problems with the complicated footwork.

“Quite some financial gymnastics,” said Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics in Washington.

The reshuffling of equity interests may not dilute the government’s control over SOEs, which would only be held in different official pockets.

But the estimated value of the stakes is only a little more than twice the amount of the annual savings on pension contributions, raising the question of what the government would do for an encore after the funds are paid out.

Since there is little chance that the SOE shares would be sold, their real value to the pension system may be far less than the official estimate.

“SOE shares are clearly not liquid assets that the pension funds can sell in order to pay benefits,” Hufbauer said.

“Maybe down the road the pension funds can borrow from the PBOC (People’s Bank of China) against the shares to get cash.”

“In any event, cutting the employer contribution as a stimulus measure was ill-advised. Cutting other taxes would make more sense,” Hufbauer said.

AFPSOEs dragging their feet
The pace of the share transfers has also been questioned.

SOEs have “dragged their feet” on fulfilling the government’s plan, fearing that pension funds would want to influence management decisions, Nikkeisaid.

The central government has already been forced to replenish the pension fund, replacing about 80 percent of the amount lost due to lower corporate contributions.

You said the government made 528.5 billion yuan (U.S. $74.9 billion) in additional direct subsidies to the pension system in the first half of the year, increasing support by 9.4 percent, Reuters reported.

Pension underfunding is endemic, in part because enterprises have already found ways to avoid making their full contributions.

“Employer contributions in China are high, and to cut costs, companies often cut corners by underreporting wage payments, or hiring more part-time and temporary workers,” said the CFR analysis by research associate Viola Rothschild.

The shortcomings of using pension funds for stimulus purposes appear to be a sign of how strongly pressures are building on the government over slowing economic growth rates, now at their lowest quarterly level since 1992.

In an Emerging Markets Monitor report on July 19, Fitch Ratings Inc. said the government is soon likely to announce “concrete measures in an effort to boost demand, and in particular disposable incomes of rural and urban residents.”

The forecast for more demand-side stimulus follows an assessment that supply-side measures have not done enough to stem the slide in gross domestic product growth.

The call for more stimulus comes at a sensitive time as external pressure on the government from tariffs appears to be taking its toll.

The report by Fitch Solutions argued that “maintaining stable growth in the upper half of its growth band target of 6.0-6.5 percent in 2019 is important to Beijing as it conducts trade negotiations with the U.S. and deals with political unrest in Hong Kong.”

“From Beijing’s point of view, a weak growth number would likely embolden Washington to take a tougher line in trade negotiations,” while the appearance of economic stability under pressure would give China “a stronger position in talks.”

A drop below the government’s target limit would be a serious setback to the credibility of its policies that could risk breaking the Communist Party of China (CPC) pledge to double GDP in the decade since 2010.

That consequence still seems unlikely, given the government’s ultimate control over official statistics. But the direction of China’s economic drift may be a powerful motive for more impractical plans like the pension ploy.

“The Chinese government faces real challenges in its effort to keep growth above six percent,” Hufbauer said.


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  #444  
Old 08-28-2019, 03:39 PM
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JAPAN

https://740thefan.com/news/articles/...ction=national
Quote:
Japan estimates cast doubt over public pension sustainability

Spoiler:
TOKYO (Reuters) - Japan's government unveiled estimates on Tuesday that showed public pension benefits steadily declining during coming decades, as it prepares to open up a debate on social security reforms needed to support an aging population.

Curbing bulging welfare spending is a vital step toward fixing the industrial world's heaviest debt burden, which is currently more than twice the size of Japan's $5 trillion economy.

While Prime Minister Shinzo Abe's government has made welfare reform a top priority, it has moved slowly due to fears that it could alienate the public.

Japan has one of the oldest populations in the world, due to a low birth rate and people's longevity, putting pressure on its pension system.

In its pension estimates - which are issued every five years to gauge health of public pensions - the government estimated monthly pension benefits at 220,000 yen ($2,087.48) per model married couple, worth about 61.7% of pre-retirement income.

This pension-to-wage ratio is projected to fall to about 51-52% by the late 2040s, with the possibility of sliding further to around 45% in the 2050s, depending on growth and population outlook.

By some estimates, the ratio would fall below 40% in the 2050s, assuming the national pension fund dries up while the economy contracts mildly and labor participation stalls.

The government presented six types of estimates based on various scenarios, including a high economic growth case and base-line case.

The estimates also took account of optional scenarios such as a wider range of part-timers include in corporate pension schemes, and delayed pension payments for people who work well past their retirement age.

The estimates were largely unchanged from the prior projections made in 2014, due partly to rises in the number of people paying into the system and rising yields on investment.

PENSION-TO-WAGE RATIO

The government has vowed to keep the average pension-to-wage ratio from falling below 50%, but worries are persisting Japan's 'pay-as-you-go' pension scheme may be unsustainable, with fewer workers paying into it and a larger retired population drawing from it.

"In Japan, adjustment in pension benefits and burdens has been lagging, while the overhaul of pension system has been left untouched," said Kazuhiko Nishizawa, social security expert at Japan Research Institute.

Pensions in Japan are a politically sensitive topic.

The estimates came a month after July's upper house polls, raising some speculation that the government may have delayed the release until the elections were out of the way.

In June, a report by advisers to the Financial Services Agency said a model case couple would need 20 million yen on top of their pensions if they lived for 30 years after retiring, fuelling doubt about pension sustainability.


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  #445  
Old 09-05-2019, 05:03 AM
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FRANCE

https://www.reuters.com/article/us-f...KCN1VN18S?il=0
Quote:
Macron's reform drive faces high-risk pension overhaul
Spoiler:
PARIS (Reuters) - President Emmanuel Macron embarks this week on the next - and likely most perilous - leg of his reform drive by launching talks with unions on an overhaul of France’s convoluted pension system to plug a chronic deficit.

FILE PHOTO: French President Emmanuel Macron delivers a speech during the annual French ambassadors conference at the Elysee Palace in Paris, France August 27, 2019. Yoan Valat/Pool via REUTERS
The potentially explosive reform is looming large over the annual “rentree”, or return to business after the summer break, when the political agenda and tone is set for the coming months.

Macron returns to his domestic agenda a week after hosting a summit of G7 leaders where bonhomie papered over trans-Atlantic divisions, the French leader casting himself as a central figure in world diplomacy and a unifying champion of multilateralism.

Domestically, Macron withstood weekly “yellow vest” anti-government protests that petered out four months ago, but he is mindful of simmering public anger over his reform agenda and eager to avoid further violence on French streets.

The talks on Thursday and Friday with uneasy union leaders and Prime Minister Philippe Edouard kick off wide-ranging consultations with various professions like teachers and nurses on what could be a defining reform of Macron’s presidency.

“The government and myself are totally determined,” Philippe told reporters on Friday. “We’ve got a few months to make it happen, to come up with and draft this project.”

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Unions have criticized Macron for turning a deaf ear to him as he lost little time early in his presidency pushing through a labor law reform and easing taxes for investors. They are also furious that he ignored their input for a much delayed unemployment insurance reform presented in June.

Pension reforms by conservative former presidents Nicolas Sarkozy in 2010 and Jacques Chirac in 1995 ignited street protests and failed to plug repeated deficits, which Macron’s government wants to wipe out by 2025.

In France private pensions schemes are rare, which means that nearly everyone pays into a public system, albeit through 42 different contribution and benefit schemes that Macron wants to replace with a single points-based scheme.

An Ifop poll for weekend newspaper JDD found that two-thirds of those surveyed did not have confidence in Macron’s government to overhaul the pension system.

“After the difficult times earlier in 2019, the symbolic importance of this (pension overhaul) will be whether the government and the president can keep reforming France,” said Bruno Jeanbart, head of political studies at pollster OpinionWay.

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RETIREMENT AGE
Though numerous pitfalls lie ahead, the age at which a person can start drawing a full pension is shaping up to be the main point of contention.

Despite the fact that people are living longer than ever, polls suggest the French remain stubbornly attached to the current retirement age of 62, one of the lowest among OECD countries.

A special government adviser on pension reform proposed in July that the age to receive a full pension should be put back to 64, although they could retire from 62 albeit with lower pension benefits.

After unions rejected the suggestion over the summer, Macron said last week he preferred to focus on the duration of a person’s career in order to receive pension benefits, rather than the age they retire.

Critics say this would punish those who start their careers in their mid 20s after long studies, a problem that Macron has said he is keen to find a solution for. Economists say people will need to pay into the system one way or another to put it on sounder financial footing.

Macron’s move was cautiously welcomed by France’s biggest union, the centrist CFDT, whose support for the reform would give the government a big boost.

“There’s the method and then there’s the deeds. We’re hearing in this rentree a change of method - all the better, but what matters is that the deeds stack up,” CFDT head Laurent Berger told France Inter radio Monday.

Slideshow (3 Images)
Other unions like the hardline left-wing CGT - which has already promised demonstrations against the reform and threatened strikes - remain up in arms.

Dismissing Macron’s gesture as “blowing smoke”, CGT head Philippe Martinez said the president “is taking us for idiots”.

The MEDEF employers federation, however, says it cannot back a reform that does not push back the retirement age, the only way it says to whittle down the pension deficit.


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  #446  
Old 09-05-2019, 05:16 AM
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BRAZIL

https://www.reuters.com/article/us-b...-idUSKCN1VP2XI
Quote:
Brazil Senate committee approves pension system overhaul

Spoiler:
BRASILIA (Reuters) - Brazil’s Senate constitutional affairs committee on Wednesday approved by a vote of 18-7 a bill that would overhaul the social security system and save the federal government about 1 trillion reais ($243 billion) over the next decade.

The vote adds to signs that President Jair Bolsonaro’s chief economic reform will see easy passage in the full Senate before he signs it into law. Overhaul of the costly pension system is being closely watched by investors worried about Brazil’s huge budget deficit.

The bill introduces a minimum retirement age, an unpopular change that means Brazilians would have to work more years to get their full pensions, but one that a majority of political leaders see as necessary to fix an unsustainable system.

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The committee also voted to draw up a parallel bill that would include state and municipal pension systems in a broader reform, which could save local governments 350 million reais over 10 years, according to its sponsor, Senator Tasso Jereissati.

That bill with follow-on proposals, which would need lower house approval after passing the Senate, was designed to avoid delaying a reform process that economists call essential to stabilizing Brazil’s public finances and re-igniting growth.

The government had originally hoped for overall fiscal savings of 1.3 trillion reais over a decade, but Jereissati declined to estimate the total impact the amended bills would have on the federal and local government budgets.

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Senators excluded a proposal by Economy Minister Paulo Guedes to have privately managed retirement accounts based on worker and employer contributions, a so-called “capitalization” model adopted in other countries such as Chile.

Under Brazilian law, bills require two votes in both the lower and upper houses if they make changes to the constitution.

Senator Davi Alcolumbre, head of the upper chamber, told reporters pension reform would clear the Senate and be ready for presidential signature by Oct. 10.


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  #447  
Old 09-15-2019, 04:08 PM
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ITALY

https://www.barrons.com/articles/in-...wn-51567809403

Quote:
In Italy, Pensioners Are Pawns in a Fiscal Showdown

Spoiler:
Eight years after a radical pension overhaul, Italy is still trying to find the right formula to satisfy its citizens’ retirement expectations while meeting European Union fiscal requirements.

The 2011 overhaul, which raised the full retirement age to 67 from 65 and paved the way for lower retirement benefits in the future, was implemented by a technocratic government tasked with addressing the concerns of bond investors amid the heat of the euro-zone’s sovereign-debt crisis. The changes have been somewhat watered down in the years since, and a new government that came to power in 2018 made overhauling the 2011 overhaul a central plank of its platform. All of this happened under the eyes of the European Commission, which, along with financial markets, have made pension reform a litmus test of Italy’s economic and fiscal credibility.

Now, a new government has just taken over, and many Italians are wondering whether they should prepare for another change in their pension benefits.

The problem is serious both in the short and long terms. Italy already spends more than 16% of its gross domestic product on pension benefits—second only to Greece among European countries. The issue takes on even more urgency when looking at Italy’s overall economic situation—a low-growth economy saddled with public debt already topping 130% of gross domestic product.


Looking at the longer term, Italy is one of Europe’s fastest-graying countries. The European Commission estimates that by 2070 the population age 65 and over will amount to more than 60% of the working-age (15-64) population compared with 34.5% in 2016. That compares to an estimate of 51% across the broader European Union in 2070, or 45% for a country like France.

In Italy, as in the U.S. and most European countries, the pension system is known as pay-as-you-go, with taxes on employers and employees paying for the pensions of today’s retirees. In such a system, it’s no wonder that most changes amount to tweaks to the retirement age, the nature of contributions, and the magnitude of benefits.

Under the new rules enacted earlier this year by the populist coalition that ruled the country over the past year, people would be able to retire when the sum of their age and the number of years they contributed reaches 100. For example, workers having contributed for 38 years would be able to retire at 62. As a concession to fiscal realism, the system was created as temporary, for people retiring in 2019, 2020, and 2021.

READ THE COVER STORY
How to Fix the Global Retirement Crisis
The center-left coalition government that emerged from the recent political upheaval may want to reform, yet again, the latest reform, even though both of its constituting parties have been mum on the topic.


Riccardo Puglisi, an economist at the University of Pavia, says the new government should act quickly to implement further pension overhauls. Italy, he says, suffers from low participation of older workers in the labor market and shouldn’t encourage people to retire early. Second, the reform is due to cost up to 20 billion euros ($22 billion) over three years, and more than double that in the longer term. And finally, he adds, “tackling the issue right away would earn the new government political capital with Brussels, where Italian pensions are a hot-button issue.”


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  #448  
Old 09-21-2019, 10:50 AM
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FRANCE

https://www.seattletimes.com/busines...nsion-changes/
Quote:
French professionals join forces to protest pension changes

Spoiler:
PARIS (AP) — Thousands of French professionals, including lawyers and doctors, took to the streets of Paris Monday in a new protest against the government’s planned pension changes.

The protest saw lawyers, doctors, nurses and others in regulated professions vent their displeasure at the proposed changes that President Emmanuel Macron’s government says will simplify France’s convoluted pensions system. The government has promised the legal retirement age of 62 won’t change, but new conditions may encourage people to work longer.

A large majority of those protesting Monday were lawyers, since the National Bar Council, which initiated the demonstration, claims the proposed changes will double the taxes its members pay.

Wearing their black barristers’ robes, they marched in Paris’ central streets singing “no, no, no to the Macron reform,” some waving posters reading “No to the pension tax.”

Most lawyers across France were on strike and decided not to plead any cases and asked for trials to be postponed.

Some demonstrators warned that provinces outside of Paris would suffer most from the reforms, that would see some smaller law firms to shutter because of higher taxes.

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Anne-Laure-Hélène des Ylouses, a lawyer in the Paris area, raised concerns that the new retirement system would deter young people from entering the profession.

“This puts in danger the economic model of lawyers, and for the youth, it worries them because in effect it will be very hard to establish themselves in a firm.”

Nurses, podiatrists and other health workers dressed in white coats marched alongside the lawyers, expressing the same fears.

Céline Ciriani, a podiatrist in the Paris suburb of Cormeilles-en-Parisis, said the new pension system “will make us lose a lot and could eventually cause offices to close because we don’t have enough money to pay our expenses.”

Macron’s government argues that the indebted pension system is long overdue for streamlining.

But there is growing opposition to the government’s proposals, which will replace the 42 different retirement systems currently linked to certain jobs with a new, unified pension scheme. On Friday, Paris endured the biggest disruption to its public transport since 2007 as unions went on strike.

Pilots and air crew, who are not regulated by the state but have special pension arrangements which allow them to retire early, joined the protest Monday. Air France has not warned of any flight disruptions.

The demonstration took place as the government is starting a three-month consultation with unions, employers’ groups and professional organizations. The pension changes will be formally presented and debated in parliament next year.

Several unions are planning demonstrations on Sept. 21 and 24 in Paris.


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Old 09-21-2019, 11:17 AM
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JAPAN

https://www.nippon.com/en/in-depth/d...-in-japan.html

Quote:
What Will Happen with Pension Uncertainties in Japan?
Society Economy Sep 20, 2019
Kumano Hideo [Profile]

Uncertainties about growing old are widely shared in Japan. Will we Japanese be able to live on the public pension alone? If not, how much savings will we need to amass by the time pension payments begin at the age of 65?

Spoiler:
Pensioners Draw Down Their Savings
How much will people need to depend on their savings once they retire in Japan? To answer this question, I will assume a household consisting of a married couple whose main source of income is the public pension. I will use statistics from the 2014 National Survey of Family Income and Expenditure of the Ministry of Internal Affairs and Communications (the most recent survey that is published every five years). The age group data for unemployed households aged 65 years or older (pensioner households) presented in this survey is more detailed than in the ministry’s Report on the Family Income and Expenditure Survey.

In this survey, two-or-more person households with a household head between the ages of 65 and 69 recorded an average monthly deficit of ¥60,276 in household income and expenditures (Figure 1). Over a period of five years, this deficit would total ¥3.62 million. The savings of this age group averaged ¥22.54 million, which likely consists mostly of a retirement allowance. For two-or-more person households with a household head between the ages of 70 and 74, the average savings balance declined ¥2.58 million to ¥19.94 million, indicating a significant drawing down of savings.

Figure 1: Household Income and Expenditures of Unemployed Households (¥/Month)
Age of head of household
65–69 70–74 75-79 80–84 85–
Disposable income 210,631 207,918 205,244 212,291 220,730
Consumption, other expenditures 270,907 250,791 222,279 218,826 211,400
Monthly balance –60,276 –42,873 –17,035 –6,535 9,330
Savings balance (million ¥) 22.54 19.94 18.12 21.72 21.09
Source: Ministry of Internal Affairs and Communications, 2014 National Survey of Family Income and Expenditure. Data for two-or-more person households.

The Effect of Economizing
Particularly worth noting is that the average monthly deficit declined for older age groups, turning into a monthly surplus of ¥9,330 for households 85 years or older. As a result, the savings balance turned to increase after bottoming out for households aged 75–79.

This data indicates that the monthly budget deficits of households aged 65–69 (¥60,276 monthly, ¥723,312 yearly) do not last for 30 years. Should such a deficit actually continue for 30 years, the cumulative shortfall would total ¥21.7 million. Elderly couples are not recording such deficits. They are reducing expenditures as they grow older so they no longer need to draw down their savings so much once they reach the age of 85 years or older. The income and expenditures of single-person households aged 65 or older (Figure 2) do not become a surplus for households aged 80 years or older, but the deficit does decline with the increase in age.

Figure 2: Household Income and Expenditures of Unemployed Single-Person Households (¥/Month)
Age of head of household
65–69 70–74 75-79 80–
Disposable income 105,822 115,291 123,482 135,255
Consumption, other expenditures 165,543 150,918 143,980 150,065
Monthly balance –59,721 –35,627 –20,498 –14,810
Savings balance (million ¥) 15.22 12.91 13.88 15.09
Source: Ministry of Internal Affairs and Communications, 2014 National Survey of Family Income and Expenditure Average for men and women

When we examine what items elderly pensioner households are economizing on to reduce their budget deficit, we find that they are mainly cutting back on clothes and footwear, private transportation, and travel and other recreational services. It is easy to imagine that economizing on food is difficult to do.

As a result, the savings balance averaged ¥21.09 million for two-or-more person households in the 85-or-older age group and averaged ¥15.09 million for single-person households in the 80-or-older age group (¥16.52 million for men and ¥14.43 million for women). Naturally, even if people have a savings balance of ¥15.0 million to ¥20.0 million when they reach the age of 80, not all of this amount can be used for living expenses. Funds will be needed for medical and nursing care expenses and for the cost of home repair or remodeling. It is possible to say that households will need to set aside ¥7.6 million by the time they begin to receive pension benefits (capital gains are not considered) to prepare for household budget deficits from age 65 to 84.

An Effective 20% Pension Reduction
The above discussion is based on the latest available statistics. If the current public pension is reduced in future years, the figures used above will change. In other words, future pension adjustments will increase the amount of funds that will need to be set aside for old age.

The income substitution rate indicates the pension a retiree receives as a percentage of the income of the working age population. In the previous verification of pension finances (2014), the income substitution rate of pensioner households (employees’ pension and basic pension) was 62.7% of working-age males’ average take-home pay, set at ¥348,000. The government plans to lower this percentage in stages to around 50%. Such a change would cause the income of pensioner households to decrease by about 20%, from ¥218,000 in 2014 to ¥174,000 in the future.

The government maintains that pension benefits will need to be slashed by such an amount to restore the stability of employees’ pension finances. Since reducing annual benefit payments by 1% is thought to increase the household budget deficit throughout retirement by about ¥500,000, reducing the pension by 20% would expand the deficit by around ¥10.0 million, and the amount needed to be set aside for old age would rise.

Some adjustment of the pension will be indispensable. Japan’s elderly ratio (the percentage of people aged 65 or older in the total population) is the highest in the world at 27%. This ratio is expected to climb to 38% by around 2050, making the current pension system unsustainable. Thus, the task at hand is to determine what kinds of reforms are needed, rather than preserving the system as it is. Reforms instituted in 2004 included the adjustment of pension benefits according to certain macroeconomic factors. Based on this rule, the effective annual adjustment of the pension is determined by the increase of life expectancy, a factor for higher expenditures, and the decrease of pension participants (insured persons), a factor for lower revenues. With life expectancy increasing 0.3% and pension participants decreasing 0.6% in fiscal 2015, the pension was adjusted downward by 0.9%. Even so, adjustments are being made at a considerably slower pace than the actual situation.

The number of people aged 65 years or older is expected grow more slowly, with the annual growth rate falling below 1% (Figure 3). However, the number of working-age people aged 15–64 will decline at an annual rate of 0.5% to 1.7%, reducing the number of contributors to pension schemes.



Some possible responses to these factors are to boost the number of pension contributors by increasing the employment rate of women and the elderly and to expand the group that can become participants in the employees’ pension. Should such steps be taken, enabling regular employees to continue working and to maintain their careers will have an enormous effect in increasing pension premium revenues. Another key step will be to raise per capita wages (productivity).

What Must We Do?
If pension benefits are adjusted downward by around 20%, the budget deficits of elderly households will increase by more than currently expected. And if the monthly deficit of households aged 65–69 increases, they will need to work to earn an income during that period. To prepare for such a risk, people will need to plan for the second half of their lives while still young. Possible approaches to take are discussing matters with a financial planner and becoming familiar with economizing and with keeping a household budget. Improving such skills will be more important than studying how to make money.

A growing number of salaried workers are continuing to work until age 64 rather than retiring at 60. For most workers, though, the level of salary income will fall sharply after they reach 60. To avoid such a situation from happening, people will need to plan their careers for the second half of their lives while in their forties and fifties, taking preparatory steps and making career choices so that salary income need not decline.

There are, however, many people who will find it difficult to flexibly design their careers. These people include the “lost generation,” who joined the work force during the so-called employment ice age lasting from the mid-1990s through much of the first decade of the current century, when stable, full-time positions were harder to come by. They will not find it easy to live off of the national pension alone from the age of 65 after years of working in nonregular employee positions. What kind of life is possible with the current monthly pension benefit of ¥65,000? What if such people do not own their home, if they live in the greater Tokyo region with its high prices, or if they need to care for their even more elderly parents? When such people run into various limitations, they will experience considerable difficulties in their old age.

(Originally published in Japanese. Banner photo © Pixta.)


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Old 09-23-2019, 06:10 AM
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https://www.dailypress.com/sns-bc-eu...921-story.html
Quote:
Paris police repeatedly use tear gas on day of protests

Spoiler:
Clusters of anti-government activists in Paris repeatedly scuffled with police who responded with tear gas Saturday as supporters of France's yellow vest protests tried to revive the movement opposed to President Emmanuel Macron 's economic policies.

In the morning, officers dispersed small crowds of demonstrators who tried to gather in central areas where police has banned protests this weekend. Most weren't wearing the motorist safety vests that gave the movement its name.

Police in full anti-riot gear moved quickly and used tear gas on and around the Champs-Elysees avenue, a frequent location for protests after the first yellow vest demonstrations against fuel taxes started 10 months ago.

Environmental activists and a far-left workers union also had organized Saturday protests. France's annual heritage weekend, a popular event when many cultural sites are open to the public, was also taking place.

Authorities deployed more than 7,000 officers and banned protests in a large central area including the presidential palace, government and parliament buildings, the Champs-Elysees, the Eiffel Tower and Notre Dame Cathedral.

Paris police said at least 163 people had been arrested as of Saturday afternoon, and nearly 400 received 135-euro ($149) fines for demonstrating in a banned area.

The yellow vest movement emerged in November 2018 and swelled into weekly protests in Paris and other French cities that led to often-violent clashes between protesters and police. The demonstrations finally petered out this summer.

Macron made multiple concessions to the movement, including a 10 billion-euro package of measures to boost purchasing power. But anger is now mounting again over his plans to overhaul France's costly, convoluted pension system.

Some of the anti-government protesters joined thousands of people at a south Paris march demanding urgent action to curb climate change. Officers ended up also using tear gas at that demonstration as well.

The atmosphere at the peaceful march grew tense when dozens of individuals dressed in black, many wearing masks and hoods, mixed in with the marchers. They broke windows at a bank and several shops, and set fire to a makeshift barricade and garbage in the street.

Police fired tear gas and sting-ball grenades several times.

Meanwhile, the far-left Workers Force union gathered thousands of protesters for a separate, peaceful march over concerns that government proposals will require people to work longer and reduce pensions.

Heritage weekend had Parisians and tourists lining up to visit landmarks and government buildings, including the Elysee presidential palace and Macron's office. The public could only access the Elysee after pre-registering and passing security checks.

Some monuments, including the Arc de Triomphe that suffered damage during a yellow vest protest in December, were kept closed to the public. Authorities said they needed police to focus on the protests rather than securing the sites.


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