EM PENSION SYSTEMS: A GLOBAL COMPARATIVE ANALYSIS
EM economies are aging at a faster rate and are less prepared to shoulder the burdens of increased aging and longer retirement periods. We believe, therefore, that there is a strong need for a comparative analysis of EM pension systems in order to understand the challenges and opportunities they face.
In this report, we examine the pension systems of 12 EM economies: Brazil, Chile, China, Colombia, India, Indonesia, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa and Taiwan.
It is crucial for these economies to have healthy, risk-controlled pension systems that contribute to fiscal stability and sustainability, as well as underpin broad-based economic growth.
Our analysis considers each economy’s macroeconomic context and demographic characteristics, as well as its pension system’s design and fiscal impact, in a holistic way.
We draw three general conclusions:
- Good macroeconomic management and a healthy labor force underpin all strong pension systems, and EM economies have the benefit of learning the lessons from developed market experience.
- Despite public pensions being the anchor of any system, it would be prudent to harness private pensions to create an effective multi-pillar system.
- Public pension wealth requires particular asset management considerations, but should nonetheless be understood in the wider context of a sovereign’s balance sheet.
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