VOLUME 2 Addressing Gender, Administration, and Communication Public Disclosure Authorized Public Disclosure Authorized Progress and Challenges Public Disclosure Authorized of Nonfinancial Defined Contribution Pension Schemes Public Disclosure Authorized Robert Holzmann, Edward Palmer, Robert Palacios, and Stefano Sacchi Progress and Challenges of Nonfinancial Defined Contribution Pension Schemes VOLUME 2 Progress and Challenges of Nonfinancial Defined Contribution Pension Schemes VOLUME 2 ADDRESSING GENDER, ADMINISTRATION, AND COMMUNICATION Robert Holzmann, Edward Palmer, Robert Palacios, and Stefano Sacchi © 2020 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 22 21 20 19 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http:// creativecommons.org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: Attribution—Please cite the work as follows: Holzmann, Robert, Edward Palmer, Robert Palacios, and Stefano Sacchi. 2020. Progress and Challenges of Nonfinancial Defined Contribution Pension Schemes, Volume 2: Addressing Gender, Administration, and Communication. Washington, DC: World Bank. doi:10.1596/978-1-4648-1455-6. License: Creative Commons Attribution CC BY 3.0 IGO Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for any content or error in this translation. Adaptations—If you create an adaptation of this work, please add the following disclaimer along with the attribution: This is an adaptation of an original work by The World Bank. Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed by The World Bank. Third-party content—The World Bank does not necessarily own each component of the content contained within the work. The World Bank therefore does not warrant that the use of any third-party-owned individual component or part contained in the work will not infringe on the rights of those third parties. The risk of claims resulting from such infringement rests solely with you. If you wish to re-use a component of the work, it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner. Examples of components can include, but are not limited to, tables, figures, or images. All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; e-mail: [email protected]. ISBN (paper): 978-1-4648-1455-6 ISBN (electronic): 978-1-4648-1456-3 DOI: 10.1596/978-1-4648-1455-6 Cover photos(from left): © Eric Miller/World Bank; © Curt Carnemark/World Bank. Cover design: Bill Pragluski, Critical Stages, LLC. Library of Congress Cataloging-in-Publication Data has been requested. Contents Preface XIII Acknowledgments XIX About the Authors XXI Abbreviations XXXI VI. Family and Gender 17. Gender and Family: Conceptual Overview 3 Nicholas Barr 18. Drivers of the Gender Gap in Pensions: Evidence from EU-SILC and the OECD Pension Models 25 Maciej Lis and Boele Bonthuis 19. The Impact of Lifetime Events on Pensions: Nonfinancial Defined Contribution Schemes in Poland, Italy, and Sweden, and the Point Scheme in Germany 55 Agnieszka Chłoń-Domińczak, Marek Góra, Irena E. Kotowska, Iga Magda, Anna Ruzik-Sierdzińska, and Paweł Strzelecki 20. Bridging Partner Life-Cycle Earnings and Pension Gaps by Sharing Nonfinancial Defined Contribution Accounts 87 Anna Klerby, Bo Larsson, and Edward Palmer VII. NDC Prospects in Emerging Market Economies 21. Administrative Requirements and Prospects for Universal Nonfinancial Defined Contribution Schemes in Emerging Market Economies 111 Robert Palacios 22. The Notional and the Real in China’s Pension Reforms 125 Bei Lu, John Piggott, and Bingwen Zheng V VI CONTENTS 23. Harnessing a Young Nation’s Demographic Dividends through a Universal Nonfinancial Defined Contribution Pension Scheme: A Case Study of Tanzania 143 Bo Larsson, Vincent Leyaro, and Edward Palmer VIII. Communicating with Participants 24. Communicating NEST Pensions for “New” DC Savers in the United Kingdom 165 Will Sandbrook and Ranila Ravi-Burslem 25. Information and Financial Literacy for Socially Sustainable NDC Pension Schemes 187 Elsa Fornero, Noemi Oggero, and Riccardo Puglisi 26. Sweden’s Fifteen Years of Communication Efforts 217 María del Carmen Boado-Penas, Ole Settergren, Erland Ekheden, and Poontavika Naka 27. Setting Up a Communication Package for the Italian NDC 239 Tito Boeri, Maria Cozzolino, and Edoardo Di Porto 28. The Politics of NDC Pension Scheme Diffusion: Constraints and Drivers 259 Igor Guardiancich, Kent Weaver, Gustavo Demarco, and Mark C. Dorfman IX. Globalization: Portability, Taxes, and Private DC Supplements 29. Pensions in a Globalizing World: How Do (N)DC and (N)DB Schemes Fare and Compare on Portability and Taxation? 289 Bernd Genser and Robert Holzmann 30. Developing Coherent Pension Systems: Design Issues for Private Pension Supplements to NDC Schemes 317 William Price 31. Closing Policy Panel: Observations and Reflections 339 Bo Könberg, Marcelo Abi-Ramia Caetano, Monika Queisser, Per Eckefeldt, and Michal Rutkowski Boxes 17.1 Sweden: Faulty adjustment to increasing life expectancy 9 17.2 Sweden: The good news: Partial pensions 11 17.3 Survivors’ pensions in Sweden 15 17.4 Accrual in an NDC plan shares risk 18 CONTENTS VII 18.1 Measuring the GGP 28 18.2 Duration of employment and nonemployment spells 31 18.3 Simulating and decomposing the GGP 39 24.1 The national employment savings trust and automatic enrollment 166 24.2 Support from behavioral economics 168 Figures 18.1 Gender gap in pensions in European countries, 2003, 2007, and 2013 29 18.2 Gender gap in incidence of obtaining individual old-age pension in European countries, 2003, 2007, and 2013 30 18.3 Gender gap in average duration of employment spells for lifespans of 15–70 years in European countries, 2013 32 18.4 Gender gap in average duration of nonemployment spells for ages 15–70 in European countries, 2013 33 18.5 Gender pay gap (unadjusted) in European countries, 2016 or latest available 34 18.6 Gender gap in annual labor earnings in European countries, 2013 or 2014 35 18.7 Gender gap in total labor earnings (including no earnings) and gender gap in pensions in European countries, 2013 or 2014 35 18.8 Progressivity of mandatory and voluntary pension schemes in European countries 37 B18.3.1 Average total annual earnings profile relative to average earnings for men and women 39 18.9 Simulated gender gaps in pensions and actually observed ones in European countries 41 18.10 Dynamics of simulated gender gaps in pensions in European countries, 2003–13 42 18.11 Decomposition of the simulated gender gap in pensions in European countries 43 18.12 Child care–related career breaks of 1, 5, and 10 years and pension amounts in European countries 45 18.13 Pension credits for child care and the simulated gender gap in pensions 46 18.14 Gender differences in life expectancy at age 65 in European countries, 2016 47 18.15 Share of women in the total population, by age, in European countries, 2017 48 18.16 Gender gap in pensions by marital status in European countries, 2013 49 18.17 Share of European pensioners receiving survivors’ benefits, by gender, 2015 50 19.1 The gap between men’s and women’s labor force participation rates, ages 20–64, 2002–16 58 VIII CONTENTS 19.2 Employment rates, by age group, gender, and country, 2002, 2010, and 2016 59 19.3 Differences between men’s and women’s employment rates by education, 2002–16 60 19.4 Part-time employment as a share of total employment ages 20–64, 2000–16 61 19.5 Raw hourly and monthly gender pay gaps, 2014 64 19.6 Age patterns of gender pay gap differences, 2014 65 19.7 Gender pay gaps by cohort, 2002–14 66 19.8 Stylized age profiles of labor income estimated using Labor Force Survey and European Structure of Earnings Survey data, 2014 67 19.9 Age profiles of labor income in four countries, ationalN Transfer Accounts estimates, 2010 68 19.10 Conceptual diagram of a sequence of labor market episodes 70 19.11 Labor market sequences of individual persons’ job episodes in two clusters for women in Poland 71 19.12 Average employment rates of