Denmarks’ pension system according to other countries systems Denmarks’ pension system according to other countries systems Authors: Cristina Harangozo Goda Dirzauskaite Irina Munteanu Elena Demirova Jaroslav Kerul-Kmec Authors: Cristina Harangozo Goda Dirzauskaite Irina Munteanu Elena Demirova Jaroslav Kerul-Kmec 11/2/2012 11/2/2012 University College of Northern Denmark Financial Management Programme 1st semester 2012 1 fie0912 Methodology project Why is Danish pension system better than in other countries? The report has been prepared by : Cristina Harangozo Goda Dirzauskaite Irina Munteanu Elena Demirova Jaroslav Kerul-Kmec
Supervisors : Nina Rohr Rimmer Sara Moller Nielsen Delivery Date : 2 November 2012 Number of keystrokes in the report : ? Number of pages in the Report : ? Contents I. Introduction3 II. Problem statement3 III. Delimitation3 IV. Methodology4 V. Denmark4 VI. The Netherlands7 VII. Australia10 VIII. Singapore16 IX. Romania18 X. Conclusion23 XI. List of literature24 XII. Appendix25 I. Introduction The topic is relevant and hopefully interesting and useful for many young people. And since Denmark is the most well-developed pension system will compare it with other countries, who obviously have a omission/gap in their pension systems.
Pension rights are very important in the system of social security legislation. The pension is a periodic cash payment, which is acquired subject to certain conditions of the law which are different depending on its type. Denmark is characterized by its high living standards and rules that follow. Denmark has a very well organized economy that is crucial for the developing society and therefore the development of the pension system. Besides the good social, economic and political situation in Denmark, Danish pension system has gotten remarkably good attention for the past years as well.
Denmark has the best pension system in the whole world. The question is why is Danish pension system is the best than other countries? What don’t have the other countries? What can they do to improve the pensions systems? As in most countries, and in Denmark the number of elderly people increases. But compared to other countries, Denmark has no so deeply affected by these processes. Therefore, we will make a comparison between Denmark and other countries. II. Problem statement The main research question is: Why is Danish pension system is the best than other countries? III. Delimitation
In our project we are trying to focus on pension systems in the world. We are comparing different retirement ages, annuitization and also different working types of pension systems. We are also focusing on the three pillar system, compulsory contribution and some laws according to pensions and retirement. We are not focusing on investments of pensions, returns from investments and other private pension schemes. We have chosen Denmark because it has the best pension system. Netherlands because it used to be the best one. Singapore as one of the Four Asian Tigers and representant of Asia, because it’s economy is rising very fast.
Australia as part of Commonwealth and former colony of England and it is also reprezentant of Oceania. And the last one is Romania in contrast to Denmark or Netherlands, because it has really bad pension system and it is part of Eastern European countries which are known to be in a financial struggle. We also try to make our own suggestions to improve these systems. IV. Methodology In order to solve our problem which is why Denmarks’ pension system is the best in the world and how could other countries improve their pension systems we have chosen other countries such as The Netherlands, Australia, Singapore and Romania to make a comparison.
We are going to do some analysis and calculations and for that our group has to use our knowledge gained in our current studies also we will use information found on the internet, various articles and books (secondary data). In order to make a comparison and go for the solutions we had to collect the information about pension systems in selected countries. We will use collected data and information and make a comparison about these countries like annuitization degree, contribution rates, retirement age, three pillar systems and in this way we will find the main disadvantages of those countrys’ pension systems.
After that we will try to make some solutions about how these countries could improve their pension systems. V. Denmark Denmark pension system has a several types of pensions. The first pillar consist of public old-age pension system and aims to secure a normal life after retirement. The public pension will be received from the age of 65. A person must have lived in Denmark for 40 years after turning 15 years old in order to be entitled to a full state pension from the Danish state. The amount of the pension depends on how long you stayed in Denmark.
The basic amount is 66,624 DKK annually. The second pillar consist of Labour market schemes and aims to secure citizens a reasonable replacement rate when they retire. They pay a certain amount of the salary. In Denmark, all employees between the ages of 16 and 64 who work more than nine hours per week pays an ATP contribution to supplement their state pension. The employer pays 2/3 of the ATP contribution, and the worker pays 1/3. ATP is a contribution-defined and fully savings-based pension scheme. The ATP contribution depends on hours worked.
This scheme includes coverage of children or other relatives in case of death of a family member. The third pillar is private pension system and aims to secure flexibility, i. e. to allow for individual requirements. Insurance companies offer different types of savings options. In these schemes, everyone make a own choices about pension scheme, premium amount, supplier. The first scheme is Capital pensions and the first important thing is that the account must be opened no later than 15 years after your early retirement age – i. e. 77 years old.
When paid out – a withholding tax of 40% is deducted and the rest 60% are for you. You can pay 46,000 DKK annually. The second scheme is annuity pension. You can make an annuity pension no later than 15 years after your early retirement age – i. e 77 years old. From 2012 you can pay maximum DKK 50,000. You paid out your money as a fixed amount per month for 10-15 years and also you have to paid out 33%. The third one is periodic payments policies. You have no limits how much money to pay annually and you can receive it from 65 years old to the death. Life long payments after 62 years – payments stop when you die.
Everyone can open an account regardless of age and is often opened after 62 years. Rules for contributions and payments of income tax follows annuity pensions until now. As you can see this is the graph about early retirement and unemployment. In recent years, the share of early retirement increases and therefore exempt jobs for young and experienced people. But on the other hand, early retirement is a bad indicator because the population in Denmark and in other countries is aging. This is a table about public pension system. Here is shown/ It’s shown how much money they are giving.
VI. The Netherlands The Netherlands pension provisions are one of the highest in Europe and that is why Dutch in the list of best pensions systems is one of the highest. It was on the top of the best pension systems in the world but recently it got down to the second place right after Denmark. The Dutch pension system consists of three basic pillars: 1. State old age pension scheme (Pay as you go system): This scheme provides all residents of the Netherlands at the age of 65 with a flat-rate pension benefit that in principle guarantees 70% of the net minimum wage.
There is no means-test for the eligibility of benefits; other forms of income have no effect on the pension entitled. 2. The payment of the AOW (The Old Age Pensions Act ) is flat-rate, that means that the income and capital position of the insured doesn’t matter. Nevertheless, the amount of pension depends on the period of insurance. The full amount of pension is only paid to those who have been insured from the age of 15 up to 65. For each year in which a person has not been insured, the state pension is deducted by 2 percent.
Occupational pensions: Although there is no obligation for employers to make pension commitments to their employees, the vast majority of those employed in the Netherlands (over 90%) participate in an occupational pension scheme. If the collective labor agreement lasts for 35 to 40 years, the total pension benefit will be around 70% of the final salary, including first pillar benefits. 3. Private pensions: The third pillar of the Dutch pension system comprises individual pension provisions. These should be taken out by an insurance provider and have nothing to do with the relationship between employer and employee.
Everyone has the opportunity to enter into these arrangements with an insurance provider. This can be done through annuity insurance as well as endowment insurance. * The Netherlands has a progressive tax rate between 33% and 52% taxable. * The mandatory age of retirement in the Netherlands is 65 years of age. * Contribution level – 13% of total wages. * Flat rate – 70% of net minimal wage. The Dutch pension system was regulated by The Pension and Savings Funds Act (1952). It has been replaced and now it is regulated by the Pension Act (Pensioenwet). The Netherlands Pension Act is based on three objectives: A major overhaul of the current Pension and Savings Funds Act; * Implementation of changes in policy; * Incorporation of the current agreements on division of tasks into the new Act. Advantages: * Private pension system – complimentary pension; * Pay as you go system. Disadvantages: * However, as population grows, these old age provisions are coming under pressure. The system needs to be modernized and more cost controls are needed if the system needs to remain affordable in the future. * Retirement age in the Netherlands is considered right now as too low.
Some reforms has to be done to make the system better. * The overall index value for the Dutch system could be increased by: • introducing a minimum access age so that it is clear that benefits are preserved for retirement purposes; • raising the level of household saving; • increasing the labor force participation rate amongst older workers; • providing greater protection of members’ accrued benefits in the case of fraud, mismanagement or employer insolvency. Comparison When comparing the Nytherlands’ and Denmarks’ pension systems we can’t see so many differences between it but there are some minor still.
We can see the difference in retirement age. In Denmark average retirement age is 64 for man and 61,5 woman. Meanwhile in the Netherlands retirement age is 65 to all genders. Also in order to get full state pension in Denmark person has to live there for 40 years after turning in 15 years while In the Netherlands – 50 years after turning in 15. In the table below you can see comparison of both countries pension systems in few aspects and however these differences are not so striking. The Netherlands| Denmark|
Early pension VUT Benefi pays 70–80% of previous wage Pay-as-you-go funded Retirement age: 58–60 Work record: 10 years in sector Occupational pensionDifferences between occupations Typical: Benfit depends on age of retirement: 70% of previous wage at age 62, lower/higher if on retirement earlier/laterCapital funded (paid from a worker’s occupational old age savings: actuarial equivalence) Retirement age: 55–65, with 62 as pivotPart-time pensionWorking 1 or 2 days per week less, with less than proportional wage decrease as from the age of 58–60 depending on collective agreement; relatively high take-upPrivate pensionState support: tax deduction of premiums up to a maximum per year. Pension payments are taxed. | Early pensionEfterlonBenfit pays 91per cent of max. nemployment benefit with ceiling (100% if take up at 62 or older)Pay-as-you-go-fundedContribution record: 25 yearsOccupational pensionRules differ between occupations. Typical: Bene”ts depend on contribution and age of retirement. Capital funded (paid from a worker’s occupational old age savings: actuarial equivalence)Retirement age: 60 and upPart-time pensionFor each hour worked the efterlon is reduced with a certain amount, which is higher for those claiming efterlon at the age of 62+. People who work more than 29. 6 h a week will receive no efterlon. Delefterlon and flexible efterlon both have low take up rate. Private pensionState support: tax deduction of premiums up to a maximum per year. Pension payments are taxed. | VII. Australia
For Australian when thinking about pensions they think about 2 retirement sources: 1. ) The first one is Superannuation-paid for through employment-related contributions. Superannuation in Australia in fact consists of arrangements which people make to have more funds for their retirement. These arrangements are very much encouraged and supported by the government. Employers are required to pay minimum 9% of every employee’s ordinary time earnings and this percentage must be registered and approved by the Australian Government. Over three-quarters of Australians have their superfunds in a balanced superannuation fund. Two-thirds of their retirement money is invested in the world’s stock markets.
Many workers rebalance their funds, moving their money into less volatile investments, when they are approaching retirement. For most people Superannuation supplements the Government’s Age Pension and provides them with additional income in retirement. Lately due to the compulsory superannuation system there has been a strong rise in superannuation assets through the growth in employee coverage and gradual rise in contribution rates. 2. ) The second retirement source is the Age Pension. One needs to have reached 65 years of age and to have lived as a resident or citizen of Australia for at least 10 years. From the 20th of March 2012 the amount allocated for one person is $ 18,077 a year and $ 27,253 a year for couples.
Age Pension is tested on assets and income, this is how they will calculate the exact amount one will get in retirement thus it will be different from person to person. According to the asset test if one has assets worth $181,750 for singles and $258,000 for couples, they will be eligible for the full state pension. The income test checks other sources of income. If you get less than $146 per fortnight or $256 for a couple then you qualify for the full pension. For every dollar you get above this amount the pension is reduced by 50 cents. At this point people over the age of 50 should review their retirement strategies because financial planners are anticipating that 33% of their clients aged under 75 will be dependant on the Age Pension for more than half of their income. The ageing of the population
The projected increases in the proportion of the population aged 65 years or older, and life expectancy will increase the number of individuals that will be eligible for the Age Pension. Under the current policy, the number of pensioneirs receiving the full Age Pension is projected to decline, while the number of pensioneirs with a part Age Pension is supposed to increase. Types of superannuation funds: In Australia there are in total 500 000 superannuation funds in operation from which 362 have assets of $ 50 millions. There are seven main types: * Industry Funds: multiemployer funds that are run by employer associations or unions; these are runned solely for the benefit of members because there are no shareholders. Wholesale Master Trusts: multiemployers funds run by financial institutions for groups of employees * Retail Master Trusts/ Wrap platforms: run by financial institutions for individuals * Employer Stand-Alone Funds: established by employers for their employees; these funds have individual trust structure which is not shared by other employers * Self Managed Superannuation Funds: for small number of individuals and these are regulated by the Australian Taxation Office; the members are the directors of the company * Small APRA Funds (SAFs): structure used for members who control of their superannuation investments but are unable or unwilling to meet the requirements of Trusteeship of an SMSF * Public Sector Employees Funds: established by governments for their employees. Legislation: Australians are using the Superannuation Industry (Supervision) Act 1993 and the Financial Services Reform Act 2002. For compulsory employer contribution they use the Superannuation Guarantee (administration) Act 1992.
The Superannuation Industry ( Supervision) Act 1993 (SIS) covers general areas relating to the trustee, investments, management, fund accounts and administration, enquiries and complaints, it regulates the operation of superannuation funds and sets penalties for trustees when the rules of operation are not met. The Financial Services Reform Act 2002 (FSR) covers a very broad area of finance and is designed to provide standardisation within the financial service industry, FSR provides licensing of ‘dealers’, oversees the training of agents representing dealers, sets out the requirements regarding what information must be provided on any financial product to members and perspective members, they also set out rules on conduct for superannuation funds. Why isn’t the Australian pension system working too well?
First of the problems is that people have a blind faith attitude to pension and therefore the government doesn’t feel the need to make the pension system a priority or make changes for customers. The second problem is that Australians have a lack of education in this area, the information and laws are complex and hard to understand thus only those who have an education in finances, pensions understand what is happening. The third one is that many employees are not represented on boards by people with experience. Trying to reform the pension system is a slow and difficult process. The Australian government’s objective is for the Australians to provide their own retirement income so they will not be dependant on the government supported Age Pension anymore but there are many reasons why this is not achievable.
Firstly it will take about 40 years until the policy will be fully operational due to the dollar level which is inadequate for most of the new changes in pension schemes. For this plan to work it is required a compulsory contribution of at least 18% so when it reaches maturity it will provide and adequate level of retirement. The Labour federal government proposed matching the pension scheme contributions for low income earners but they never put it in application. Another problem is that the system of compulsory contributions does not cover self employed persons, very low income earners and those in receipt of social security pensions. This system does nothing to ensure optimum returns and benefits will be derived by the members. The Australian Pension System in comparison to the Danish pension system
As my little top list shows Australia is the third country for the Superannuation, meaning that Australians are trying to pay their way through the retirement years making different arrangements, mostly investing in the world’s stock market. This is somehow similar to the Danish way of preparing for retirement still the Australian pension system is not giving the high results that Denmark is at present time. The retirement age in Denmark is 64 for men and 61. 5 for women while in Australia the retirement age in 65. These pension systems are built on a 3 pillar structure. The first pillar is covering state pension, the second pillar is the funded pensions and the third one is the voluntary funded pensions pillar.
In all cases pensioners are getting at least the public unfunded pension but to receive the full state pension there are some conditions to be fulfilled. In Denmark one needs to have been a resident of Denmark for at least 40 years after turning the age of 15 while in Australia one of the conditions is of course the age, and the second one is that one must have been a resident of Australia for the at least the past 10 years. The three pillar system: Country| Pillar 1 and 0=Public Unfunded| Pillar 2=Mandatory or Quasi-mandatory funded| Pillar 3=Voluntary funded| Australia| Universal pension financed fromgeneral tax revenues and subjectto clawback provisions| Occupational system, operatingmostly DC plans.
Provisionthrough corporate, industry orretail funds. | Voluntary plans for additionalprovision and for self-employedworkers. | Denmark| (1) Universal pension financed from general tax revenues. (2) Supplement to low-income pensioners. Both benefits are subject to clawback provisions. | (1) Public schemes (mainly ATP) operating DC plans. (2) Occupational funds and insurance companies operating mostly DC plans, based on collective agreements. | Voluntary plans for workers not covered by labor agreements and for additional provision. Offered by pension funds, insurance companies, and banks. | The amount of money that an individual can get from the state when retiring in Denmark is aprox. 6,624 DKK per year and $ 18,077 per year in Australia. I think the main difference between these two pension systems is how Danes invest in stocks, shares and bonds from an relatively early age and they use the money for retirement. In Denmark there are also many private pension schemes and each person can choose the one that is the most appropriate while in Australia they are taking advantage of the Superannuation which is promising but at present time is not good enough. In this case the employer is obliged to pay a minimum of 9% of every employee’s ordinary time savings and after this there are all to investments that Australians do for retirement.
Still, a problem for the future is that the Australian Government wants to make the Australians to not be dependant anymore on the Age Pension still the financial forecasts are showing that many pensioneirs depend on the Age Pension for more than half of their income. A huge difference for these countries is due to the annuitization level which in Australia is considered to be low while in Denmark is 50%, which is very high. We can say about the Australian pension system that it has a pretty descentralized structure. There are too many insurance companies and superannuation funds competing in a market that is not constrained by persuasive product and price controls.
Some of the institutions are single employer or multiemployer funds that operate as non-profit entities and there is also a significant number of master trustees, owned and operated by profit-seeking financial groups which don’t necessarily have the experience and maybe knowledge. Retail funds have high operating costs and fees, which result in significantly lower net investment returns. I see Denmark as having a much cleaner and clearer pension system which is indeed complex and might get a little bit overhelming for those who are not educated in this area but it is a pension system that is giving very good results. VIII. Singapore General info
Difference between Singapore and other publicly managed pension schemes is that Singapore has system called Central Provident Fund which operates on totally funded basis. The Central Provident Fund does not include social risk association and redistributive elements. People count on contribution funds which are accumulated in individual accounts. How Does it work The Central Provident Fund deals with private and public sector employees same as with the self-employed , these ones can join voluntary. In this Central Provident Fund employer and employee have to make compulsory payments every month which will go into a fund which is set mainly for worker’s retirement.
The Central Provident Fund is basically system of savings which consists of worker‘s salary certain percentage which varies : 20% to 55years then 12,5% from 55years till 65years , then 7,5% thereafter. Also employer has to make a contribution which varies : 10% to 55years then 4% from 55years to 60years and then 2% until retirement. Employees with monthly salary above EUR 247 have to support to their Central Pension Fund accounts. Lower limit is set for employers who have to pay to Central Pension Fund posts for employees whose monthly wages get over EUR 25. Contributions which come every month are capped at wage ceiling of EUR 2,224. Proportion contributed to various account differ based on the age structure of employee.
There is a possibilty to withdraw some certain amounts from this fund but only for some special reasons , for example medical emergencies, buying a home or investing in stock. All in all main reason for existence of this fund is to ensure that everyone has enough savings to retirement. This table shows total CPF savings at age 55 among elderly who were age 59 and Above in 1999. For example 30,70% people had less than 5000 Singapore dollars in theri CPF. Retirement Retirement and Re-employment Act replaced previous Retirement Age Act on 1 January 2012 and says that statutory minimum retirement age is 62 but workers are required to offer re-employment to employees who reach 62 , up to age 65years. Law in Singapore pension system
Referring to Pensions ACT (chapter 225) there is Compulsory retirement 13. It shall be lawful for the President to require any officer to retire from the public service in Singapore (a)who has attained, in the case of a male officer in the public service in Singapore on 1st July 1956, the age of 55 years, and in the case of any other male officer the age of 60 years or 55 years if the President in any individual case so directs; (b)who, being a police officer below the rank of assistant superintendent, prison officer below the rank of superintendent or a male nurse at a Government mental hospital , has attained the age of 45 years; [4/2010 wef 17/02/2010] c)whose retirement appears to the President to be desirable in the public interest; (d)who, being a woman appointed to the public service before 1st March 1962, is married or marries and has opted to remain eligible for a gratuity on marriage; (e)on the abolition of his office; (f)for the purpose of facilitating improvement in the organisation of the department to which he belongs by which greater efficiency or economy may be effected; or (g)who has attained, in the case of a female officer appointed to the public service on or after 1st March 1962, the age of 60 years or 55 years if the President in any individual case so directs. IX. Romania
The Romanian Pension System is formed from 3 components: the public pension system(the 1st Pillar), the private pension system(2nd Pillar) and the optional pension system(3rd Pillar). The main laws for pension system of Romania are: * The occupational pension law * The law of the universal funds of pensions administrated privately THE PUBLIC PENSION SYSTEM also called the “pay-as-you-go” system gives people the right to receive a pension at the retirement age. According with the present legislation, the persons who after retirement are still working and contributing to the system will receive an increased pension (re-calculated on an annual basic).
The system is 99% financed from social security contributions payed by employers and employees. The average pension for the 1st Pillars beneficiaries is 330 RON (? DKK 550), it is received by the all women who reach 60 years and all the men who are at least 65 and the minimal contribution period is for 15 years. “The calculation method consists of cumulating the monthly revenues and turning them into scoring points, with the average number of points being multiplied by the value of the pension point as established by law”. It is based on a scoring system which takes into account the actual revenues for the entire period of service and includes re-distribution calculation items based on the contribution principle.
The employers’ contribution rate is established based on the work category, and since 2007 it stood at 19. 50% for the normal work conditions category, while the individual contribution rate is at 9. 50%; the total social security contribution is 29%. (http://www. cef-see. org/pension_reform/Romania. pdf) THE PRIVATE PENSION SYSTEM (2nd Pillar) consists of the development of an obligatory system of individual pension funds which are in the portfolios of private companies. This system gives the opportunity for a supplementary pension in addition to the public pension system. The base of this system are the commercial companies settled for the purpose of managing the pension funds.
The main component of the private pension system are: authorization criteria, investment regulations, guarantees, minimum capital and regulations on costs and fees. 1. The authorization criteria: – the licenses for funds are granted by The Pension Control Commission. – the regulations are based on the capital and professional credentials of the companies management 2. Investment regulations: – used for minimizing the portfolio, market and agency risks – the law stipulates ceilings on bank deposits, state bonds and shares, holded by the insurer 2. Guarantees: * A minimum return over the working lifetime of people * 0 real rate or return on the participants contribution 3. Minimum capital: Is required a significant share capital (10 million euro ) from which 5 milions must be kept in cash permanently in the country * Managers must contribute to The National Guarantee Fund which imposes a significant cost transferred to this system members 4. Regulations on costs and fees: * A percentage of contributions (front-load) * A percentage of the value net assets THE OPTIONAL PENSION SYSTEM (the 3rd Pillar) is formed of voluntary contributions of the insured to different pension funds or insurance companies. The investment of the optional pension funds’ assets is tax exempt until the rights are duly paid to participants and beneficiaries. The contribution to the optional fund is for each participant deductible from the monthly average gross salary, or any ncome, in the limit of an amount of 200 Euros in one fiscal year.
The difficulties the Romania’s pension system is confronting with are: * Demographic pressure * Changes in the legislation during the years * The rapid increase of retired persons for disability reasons * The employers’ refuse to register the real number of their employees * Non-registered self-employed and farmers * A large group of emigrated workers ( 2 millions) * Grey economy and the black market Analyzing the Romanian pension system, we can say that we will obtain 3 types of pensions: * “A state pension which will be smaller and smaller * A private pension which will be bigger and bigger * An optional pension whose value will depend on how much the respective person will subscribe” (http://steconomice. uoradea. o/anale/volume/2007/v2-finances-accounting-and-b anks/49. pdf) The evolution of private pension market Grey – nr of participants Dark grey – contribution/ participant White grey – total on market According to the calculations of Private Pension Supervision Commission, a 20 euro contribution per month during 25 years can assure an almost 140 euro pension during 15 years. The average yield on investments in voluntary pension will be 7%. This yield is superior to the public pension system and it will convince Romanians to invest by their own in old age perspective. The participants’ number on system was astimated to 300 000 in the first year of collecting contributions.
After 10 years of efforts, private and voluntary pension schemes begin to be implemented, but the first beneficiaries will receive money only after 20 years. http://www. scritube. com/economie/finante/LUCRARE-DE-DIPLOMA-FINANTE-SI-55298. php THE EVOLUTION OF THE IMPLICIT TAX SHARE AND OF THE EFFICIENCY INDEX OF SOCIAL INSURANCE CONTRIBUTION IN ROMANIA (1ST PILLAR) Rata implicita de taxare CAS = the implicit SIC tax rate Cota legala de CAS = SIC legal rate Indice de eficienta = efficiency index(right side scale) Efficiency index = the implicit SIC tax rate divided to SIC legal rate The graph is about the report between the implicit SIC tax rate and the SIC legal rate. In other words, the graph is about the report between.
The implicit Social Insurance Contribution tax rate represents the volume of Social Insurance Contribution actually received (declared but unpaid obligations) The Social Insurance Contribution legal rate represents the Social Insurance Contribution legal approved for collection. The implicit Social Insurance Contribution tax rate is smaller than The Social Insurance Contribution legal rate because some of the big companies do not have the possibility to pay their debts to the Social Security Budget because of inactivity or insolvency. Because The Social Insurance Contribution legal rate is smaller than The Social Insurance Contribution legal rate, the Efficiency index is smaller.
In the chart above, the efficiency index represents a sinusoidal line depending on the proximity values between The implicit Social Insurance Contribution tax rate and The Social Insurance Contribution legal rate. http://www. wall-street. ro/files/131509-255. pdf X. Conclusion XI. List of literature 1. Global pensions asset study 2012 [online] Available at http://www. towerswatson. com/assets/pdf/6267/Global-Pensions-Asset-Study-2012. pdf 2. News and analysis site [online] Available at http://www. top1000funds. com/ 3. Pensions accounting survey in the Netherlands [online] Available at http://www. kpmg. com/NL/nl/IssuesAndInsights/ArticlesPublications/Documents/PDF/Insurance-en-Pensions/KPMG-Pensions-Accounting-Survey-in-the-Netherlands-2012. pdf 4. XII. Appendix
