• New individually funded programs. The Government of Belarus approved a new voluntary pension savings program, which will start operating from Oct. 2022. For those workers who wish to participate (contributing up to 10% of their salary), employers must match the first 3% that their workers save, proportionally reducing the contribution they direct to the PAYGO pension program.

• Crisis in public PAYGO pension systems. In Ecuador, a World Bank study recognizes that the public PAYGO pension system not only has financial problems, but is also regressive since it grants a pension to the highest-income people that is the equivalent of seven times what they contributed while working. In Costa Rica, reforms were approved to the public PAYGO pension system that will come into effect from 2024, which will give it respite until 2050 (instead of until 2037) and which, among other aspects, modifies the pension calculation formula so that the best 300 salaries reported (instead of the last 240 salaries) are taken as a basis. In Spain, the Senate approved several modifications to the public PAYGO pension system, many of which entered into force in January 2022, and among the most salient being: (i) On January 1 of each year, pensions will be automatically adjusted, based on the average annual inflation of the previous year (they were previously adjusted based on the CPI estimated at the beginning of each year); if inflation is negative, pensions will remain unchanged; (ii) Several measures for streamlining the effective and official retirement ages, such as penalties for early retirement and incentives for postponed retirement; and (iii) An “Intergenerational Equity Mechanism” (MEI) that replaces the repealed “Sustainability Factor,” reactivating the Social Security Reserve Fund through an additional 0.6% contribution. In Italy, the government approved that, starting in 2022, people claim an old-age pension if the sum of their age and years of contributions is at least 102 (previously the sum had to be at least 100).

• Adjustments in retirement age and contribution rate: In Israel, a new law will increase the retirement age of women gradually, by 4 months per year from 2022 to 2024 (from 62 to 63 years) and by 3 months per year from 2025 to 2032 (reaching up to 65 years; the age of men remains unchanged at 67 years). In Singapore, a series of changes to the funded system (CPF) will be implemented from 2022, including higher contribution rates for certain groups of workers and higher retirement ages (from 62 to 63).

• Relevant studies: According to the latest OECD report, Pensions at a Glance 2021, the biggest long-term challenge for pension systems continues to be to provide financially and socially sustainable pensions in the future, in a context of aging. The report suggests that it is crucial that countries establish automatic adjustment mechanisms in their pension systems that change parameters (such as the retirement age, benefits or contribution rates), when demographic, economic or financial indicators change. In addition, it points out that allowing early access to pension savings to compensate for economic difficulties results in lower retirement benefits.

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