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Economic & Sector Work :: Other Social Protection Study

Mauritius : Modernizing an Advanced Pension System

ACCOUNTING AGED AGING ANALYTICAL WORK ANNUITIES ASSET MANAGEMENT BASIC PENSION BENEFIT LEVEL BENEFIT RATE CIVIL SERVICE CONSULTATION PROCESS CONTINGENT LIABILITY CONTRIBUTION RATES CONTRIBUTION RECORDS DEBT DEFICITS DEMOGRAPHIC STRUCTURE DEMOGRAPHIC TRANSITION DEMOGRAPHICS DEPENDENCY RATIO ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC MANAGEMENT ECONOMIC STABILITY EMPLOYMENT EXERCISES EXPENDITURES FINANCIAL SERVICES FINANCING SOURCES FUNDED COMPONENT GROWTH RATE HOUSEHOLD CHARACTERISTICS HOUSEHOLD INCOME HOUSEHOLD POVERTY INCOME COUNTRIES INCOME INDIVIDUALS INDEXATION INDIVIDUAL ACCOUNTS INFLATION INSTITUTIONAL CHANGES INSTITUTIONAL ENVIRONMENT INSTITUTIONALIZATION INSURANCE INVESTMENT GUIDELINES INVESTMENT RETURN LABOR FORCE LABOR MARKET LIFE EXPECTANCY LIFETIME EARNINGS LIVING STANDARDS MANDATES MINIMUM INCOME MINIMUM INCOME GUARANTEE MORTALITY NEW ENTRANTS PARTNERSHIP PAYROLL TAX PENSION AGENCY PENSION COVERAGE PENSION FUND PENSION FUNDS PENSION LIABILITIES PENSION PLAN PENSION REFORM PENSION RIGHTS PENSION SCHEMES PENSION SYSTEM PENSION SYSTEMS PENSIONS POLITICAL COMMITMENT POPULATION GROWTH POVERTY IMPACT POVERTY LINE POVERTY REDUCTION PRESENT VALUE PRIMARY EDUCATION PRIVATE SAVINGS PRIVATE SECTOR PUBLIC ENTERPRISES PUBLIC SECTOR RADIO REAL TERMS RECURRENT EXPENDITURES REDUCING POVERTY RELATIVE POVERTY REPLACEMENT RATE REPLACEMENT RATES RESOURCE ALLOCATION RETIREES RETIREMENT RETIREMENT AGE RETIREMENT INCOME RETIREMENT SAVINGS SOCIAL PROTECTION SOCIAL SECURITY STATISTICAL OFFICE SUPERVISORY AGENCY SUPERVISORY FRAMEWORK SUPPLEMENTARY PENSIONS TAXATION TECHNICAL ASPECTS TIME FRAME WORKERS PENSION SYSTEMS PENSION FUNDS ADMINISTRATION PENSION FUND MANAGEMENT DEMOGRAPHIC TRANSITION POPULATION ECONOMICS AGING PERSONS INCOME SHORTFALL PRIVATE PENSION FUNDS DUALISM RETIREMENT INCOME PRIVATE SAVINGS REGULATORY FRAMEWORK PUBLIC SECTOR MANAGEMENT FINANCIAL SYSTEMS RISK DIVERSIFICATION FISCAL CONSTRAINTS PENSION VALUATION LABOR MARKET NEXUS SUPPLEMENTARY PENSIONS
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Washington, DC
Africa | Mauritius
2013-09-05T21:44:09Z | 2013-09-05T21:44:09Z | 2004-06-30

The report examines the pension system in Mauritius, a country which over the past two decades, has made enormous progress in economic development, and poverty reduction, and which today, is facing a much earlier demographic transition in its development cycle, than other upper income, and high income countries have experienced. The questions being addressed are whether the current pensions arrangements will be financially sustainable, given the projected ageing of the population, and whether they will be equitable and efficient, at a time when the system will be relied on by a growing number of people. Mauritius has a three-tiered pension system that helps the poor, and provides moderate (although declining, in the case of the private sector) replacement income for working people, and no regulatory protection for voluntary retirement schemes. The un-funded nature of the universal scheme, together with the income maintenance scheme of the civil service, are endangering the country's economic stability. At the same time, declining benefits to the working class, are jeopardizing living standards at retirement, while the lack of a regulatory environment for private savings, discourages maintaining private savings through the formal financial system. Concurrently, public sector management of the private contributory schemes, deprives contributors of maximum returns, and concentrates risk only on the local economy, enhances government consumption, and deprives the domestic private sector of financing sources. The poor performance of the contributory tiers, exercises upward pressure on the un-funded tier, increasing the system's fiscal risks. The report adopts an approach that seeks to diversify the economic, and political risks inherent in pension systems, for while economic risk can come from fiscal concerns, particularly of un-funded schemes, and from re-distributive concerns, political risks otherwise, arise from outside the country's financing capacity. The approach suggests maintaining a small, and efficient un-funded re-distributive component (first pillar) to meet the needs of the poor, and, a dual, funded, and privately managed component for income maintenance, and life-time consumption appease. The dual character of the funded component aims to assure moderate replacement income, via a mandatory privately managed scheme (second pillar), and to provide as well, opportunities for private provision to meet individual preferences, or labor market response for supplementary pensions (third pillar).

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