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Economic & Sector Work :: Policy Note

Pensions in Palestine : Reform in a Context of Unrest, Voume 2. Technical Annex

ACCOUNTING ACCRUAL RATES ANNUITY ASSET MANAGEMENT ASSETS BENEFIT FORMULA BENEFIT INDEXATION BENEFITS CAPITAL FLOWS CIVIL SERVICE CIVIL SERVICE PENSIONS CONCEPTUAL FRAMEWORK CONSUMPTION PATTERNS CONTRIBUTION RATES DEBT DEFICITS DEMOGRAPHICS DEPOSITS DISABILITY PENSIONS ECONOMIC SITUATION EMPLOYMENT EXPENDITURES FINANCIAL INSTITUTIONS FINANCIAL RESOURCES FOREIGN BANKS HUMAN DEVELOPMENT INFLATION INSURANCE INSURANCE COMPANIES INVESTMENT PERFORMANCE INVESTMENT RETURN INVESTMENT RETURNS ISOLATION LABOR MARKETS LIFE EXPECTANCIES LIFE EXPECTANCY LONG-TERM CAPITAL MANDATORY RETIREMENT MORTALITY MUNICIPALITIES NEW ENTRANTS NORMAL RETIREMENT AGE PENALTIES PENSION COSTS PENSION COVERAGE PENSION FUNDS PENSION LIABILITIES PENSION REFORMS PENSION SCHEMES PENSIONERS PENSIONS PRIVATE EMPLOYERS PRIVATE PENSION PRIVATE SECTOR PROFESSIONAL ASSOCIATIONS PROVIDENT FUNDS PUBLIC DEBT PUBLIC SECTOR REPLACEMENT RATE REPLACEMENT RATES RESOURCE ALLOCATIONS RETIREES RETIREMENT RETIREMENT RETIREMENT AGE RETIREMENT AGES RETIREMENT BENEFITS RETIREMENT INCOME RETIREMENT PENSIONS RETIREMENT PROGRAMS SAFETY SAVINGS SAVINGS PLANS SOCIAL INSURANCE SOCIAL PROTECTION SOCIAL SECURITY TRADE UNIONS UNEMPLOYMENT UNEMPLOYMENT RATES VIOLENCE WAGE GROWTH WAGES WIDOWS WORKER CONTRIBUTIONS WORKERS PALESTINIANS VULNERABLE GROUPS CIVIL SERVICE REFORMS CORPORATE GOVERNANCE PENSION REFORM RETIREMENT AGE PENSION COVERAGE PENSION FUNDS INVESTMENTS SOLVENCY GOVERNMENT CONTRIBUTIONS DEPRECIATION DISCLOSURE LAWS & REGULATIONS STAFFING PRIVATE PENSION FUNDS SYSTEMIC REFORM OLDER WORKERS PENSION FUND MANAGEMENT PENSION VALUATION PENSION SAVINGS PENSION FUND ACCOUNTING
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Washington, DC
Middle East and North Africa | West Bank and Gaza
2013-08-07T20:00:02Z | 2013-08-07T20:00:02Z | 2003-02-28

At the request of the Palestinian Authority (PA), the status of pension schemes in the West Bank and Gaza was reviewed, and a technical analysis of the two civil service schemes was undertaken. A Technical Appendix reports in detail on projections of the financial status of the civil service schemes as well as on improvement options. This paper summarizes the main findings and highlights the policy implications. Its primary focus is on solutions that could be implemented in the short-term. The civil service pension schemes are bankrupt and in need of reform. The major issues facing them are: financial non-sustainability; government arrears in contributions; corporate governance issues resulting in rapid depreciation of the pension fund; the lack of financial disclosure; government overstaffing; and the lack of coverage for the private sector. This report recommends as critical next steps in the short term that there must be immediate and significant parametric reforms designed to restore financial solvency and enhance equity, such as reducing the retirement age and cutting benefit accrual rates. Governance, that is, increasing the transparency and efficiency of the Gaza Pensions and insurance Corporation (GPIC), the largest non-bank financial institution in the West Bank and Gaza, has been suggested. Right-sizing government employment is also important. In the long-term, systemic reforms will be needed to solidify pensions for government workers. Comprehensive protection for all elderly persons, one of the most vulnerable groups, is desperately needed within the context of the current crisis. A universal flat benefit scheme is the only short-term option that can provide broad-based assistance. Another short-term key concept is the recovery of pension transfers owed to Palestinian workers from Israel; the value could be significant and could avert poverty for many soon-to-retire Palestinians with extensive work histories in Israel. The sequencing and initiation of pension reform is a lengthy process, involving the reconciliation of conflicting priorities among different stakeholders. Within the context of the West Bank and Gaza, it may be best to think of the reform process in three steps: commitment building, coalition building, and implementation.

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