2014年-世界发展银行全球_Review_of_the_Actuarial_Forecasts_of_the_Proposed_Contributory_Social_Security_Regime_in_Timor-Leste_16页_1mb

Summary of the Actuarial Review of the Proposed Contributory Social Security Regime in Timor-Leste

Core Content

This report provides a critical review of the actuarial forecasts (ACL Report) for a proposed contributory social security regime in Timor-Leste. The World Bank (WB) was commissioned to assess the design, financing, and administrative aspects of the system, particularly in relation to its long-term financial sustainability.

Main Findings

1. Scope of Work

• The WB was tasked with:
  • Recreating the costing from the ACL Report and extending it to 2050 and 2080.
  • Assessing the accuracy of assumptions and data sources used in the ACL Report.
  • Calculating required contribution rates and benefit reductions to ensure financial sustainability.
• The WB focused only on old age, disability, and survivor benefits; maternity, paternity, adoption, and funeral benefits were not analyzed.

2. ACL Report Assumptions and Methods Comments

• Projection Period: The ACL used a 30-year projection period, which is shorter than international standards. A 75-year or longer period is recommended for accurate long-term cost estimation.
• Real Wage Increase: The ACL ignored productivity and wage growth, which is critical for long-term cost projections. In developing countries, productivity growth is expected to be higher initially and then stabilize.
• Use of Average Wage: The ACL used an average wage to calculate benefits, which underestimates old age liabilities as higher wages are typically used in benefit calculations.
• Contributor Rate: The ACL assumed 8% of the working-age population would contribute, which was later found to be significantly lower than the actual 16%.
• Program Expenses: The ACL assumed no administrative costs, which is unrealistic. A new pension fund would require significant operational expenses.
• Contribution Collection Efficiency: The ACL assumed 100% collection efficiency, which is unlikely in the early years of a new system.

3. Plan Design Comments

• Replacement Ratio: The proposed 100% replacement ratio for old age benefits is non-standard and unaffordable. International standards suggest around 40%.
• Disability Benefits: The ACL's design for disability benefits is non-standard, as it bases benefits on accrued benefits at disablement rather than a flat rate or a percentage of projected retirement benefits. This may lead to inadequate support for younger disabled workers.
• Survivor Benefits: The survivor benefit design is atypical. It depends on the age of the youngest child, does not reduce with age, and may not be adequate for families with multiple children.

4. PROST Analysis: ACL Report Design, Assumptions and Methods

• The WB used the PROST model to analyze the program, extending the projection period to 2100.
• The required contribution rate to balance the fund over various time periods was estimated as:
  • 2015–2045: 6.9%
  • 2015–2050: 9.0%
  • 2015–2080: 3.7%
  • 2015–2100: 33.7%
• The long-term cost of the program is estimated to be 31.2% of covered payroll when using the WB's assumptions.
• The pay-as-you-go cost increases over time due to population aging, rising dependency ratios, and higher replacement ratios for future cohorts.
• With a 15% contribution rate, the pension fund assets would exceed 25% of GDP by 2030 and be fully exhausted by 2063.

5. Financing Options

• The WB notes that the cost of the program can be financed in various ways, but the level contribution rate is used as a proxy for cost comparison.
• If the government chooses a higher contribution rate than the initial cost, it must ensure that assets are protected and invested properly to avoid future shortfalls.

6. Replacement Ratio Adjustments

• If the desired contribution rate is 15%, the target replacement ratio for old age benefits should be reduced to 48.1%.
• If the desired contribution rate is 6.75%, the target replacement ratio should be reduced to 21.6%.

7. Social Security Pension Fund Establishment

• The WB reviewed international experience on the establishment of social security administrators.
• A separate statutory body is typically responsible for administering social security programs, including registration, contribution collection, and benefit payment.
• Some countries, such as Bangladesh, Brunei, Guernsey, Ireland, and others, manage social security programs directly without a separate administrator.

Key Recommendations

• The ACL report does not meet international standards due to unrealistic assumptions and a short projection period.
• The target replacement ratios are too high and unaffordable.
• A longer projection period (75+ years) is necessary for accurate cost estimation.
• Administrative costs and contribution collection efficiency should be factored into the analysis.
• The government should consider all aspects of design and funding before implementing the system, as it has significant macroeconomic, labor market, and social implications.

Conclusion

The WB concludes that the proposed social security system in Timor-Leste is financially unsustainable under the current assumptions and design. Adjustments to the replacement ratios, projection period, and assumptions are necessary to ensure long-term viability and equitable benefit distribution. The government is advised to carefully evaluate the actuarial and administrative implications of the system before finalizing it.