1. Changing employment relations & reforms of social security systems

2. Social Security Systems
Generally speaking, social security systems refer to set of institutions, measures, rights, obligations and transfers to guarantee –
- Access to health care & social services
- Minimum income security in old age, disability & in
unemployment situation
here we will talk mainly about pension systems (retirement income)

3. Reforms in Pension systems (retirement-income
schemes) are needed BUT often become controversial
Government concern:
- Expected rise in the number of pensioners (as
proportion of workforce)
- Viability of Pension scheme – can the scheme pay
tomorrow what it promises the workers today?
Employers concern: Costs
Workers concern: contributions & future adequacy of pension benefits, coverage, delivery & certainty of benefits (especially for those working in informal economy)

4. What changes are being introduced?
Reduce publicly funded part of pension benefits & encourage private contributory schemes
Shift to defined contribution (from defined benefits) system
Privatization
- shift away from national system to private schemes
- private management of pension funds
Increase in retirement age
lengthening the period over which wages & salaries are averaged for purposes of calculating benefits
 Social security not a human right but individuals responsibility

5. Defined Benefits v/s Defined Contribution Schemes
Defined benefits (DB) pension schemes are financed on a ‘pay as you go’ basis while Defined contribution (DC) pension schemes are pre-funded by participant & benefits depend on what she/he contributes
The shift toward DC schemes has been made to avoid fiscal burden on the governments in view of aging populations, increasing life expectancies & number of pensioners estimated in future as also rising health care costs & falling investment returns
Under DC scheme people are expected to retire later and contribute for longer period. This policy also expects people to save for their retirement and expected to bring in also self employed.

6. Defined Benefits v/s Defined Contribution Schemes
Shift towards DC schemes also was accompanied by privatization which was expected to raise the rate of return on investments of pension funds.
But what has happened since this shift?
- reduced income security in old age
- future benefits became unpredictable
- high admn costs of privately managed pension schemes
- coverage reduced (woman, poor, part time & other workers in precarious employment
- private pension funds have not benefited national economy (neither increased national savings nor developed capital markets - WB).

7. Assumptions behind Pension Schemes
Existence of employer-employee relationship
Wage earner/Employee status of workers
Worker earns a certain level of income throughout their entire career (unemployment period not taken into account in the design of the schemes)
For full pension benefit: contribution of 33 – 40 years, depending on the country’s retirement age before being eligible for full retirement pension.
But what is the reality of job market in recent years?

8. Changing labour market
Flexible labour markets – most workers will not have many years of contribution & hence will not get full pension benefits.
Changing nature of employment: contractual - where the employment is offered not as appointment but as assignment (as in a client-supplier relationship) – denial of employer-employee relationship & hence no employer contributions to social security.
Informal economy: Most social security programmes not designed to take account of employment relationships in informal economy where employer- workers relationship is often disguised & where it exists, it is temporary

9. Social Security & Gender
Reforms in pension schemes
– reduce publicly funded part of pension benefits
– shift to defined contribution schemes
– encourage private contributory schemes
these affect all workers but women more adversely affected due to the nature of their labour market participation & employment opportunities.
– lower paid jobs, part time employment, interrupted & shorter employment record, undeclared forms of work lesser contributions & lower pension benefits

10. Social Security & Gender
Increase in retirement age
Traditionally, women’s retirement age in most countries was lower than that of men – perhaps as compensation to their years of unpaid work in the care ‘economy’. This benefited women under ‘defined benefits’ publicly funded social security schemes;
But under ‘defined contributions’ system, increase in retirement age can mean – women either – get lower pensions or work longer years, even then may not get equal pensions
Issue of spouses pension (which is lower)

11. Social Security System: Issues
Is social security system a ‘cost’ to economy or an ‘investment’?
Social security entitlement: mainly ‘employee’ based
What kind of system should be there?
- National? Company based?
- Public? Private?
- Insurance based? Tax based?
Who should pay?
Addressing exclusion & discrimination & improving coverage (women, casual workers, informal workers)
Collecting contributions & delivering benefits – how?
Maintaining purchasing power of pensions or living standards of pensioners? (price indexing v/s wage indexing)

12. Social Security System: Issues
Maintenance of living standards in retirement:
Only for those in fulltime paid employment? Or also for those who experience spells of unemployment & for people (usually women) who leave the labour force temporarily to bear & raise young children  role for cross subsidization (not of earnings’ related programs BUT through DB plans & publicly administered plans)
Role of workers representatives/representatives of pension plan members - in governance of the schemes, in investment decisions of pension funds - & this will require also training of union representatives & education of membership
Need to raise awareness of Youth - pension is not just about old people – need to promote ‘life course perspective’ & cross generational solidarity

13. Should pension systems & its reforms be decided on the basis of -
- technical necessities alone? OR
- should the choice be made on the basis of political
choices – reflecting what workers /society wants
than what only the rich/those in power want?
Ex: Sustainability debate about the future of public pension programs - if tax increases are required by current arrangements, then they are considered unsustainable – WHY?