This report is the first evaluation of the Bank's involvement in pension reform between 1984 and 2004, during which time the Bank assisted 68 countries with reform of their pension systems with loans and credits.
It assesses the Bank's pension reform strategy of recommending the establishment of a multi-pillar pension system, in countries satisfying preconditions, which include sustainable macroeconomic policies, a sound financial sector, and sufficient implementation capacity.
Based on the Bank's strategy, the Independent Evaluation Group (IEG) used the following criteria to judge the soundness of pension reforms:
impact on the income of the aged
the nature of the fiscal policy and financial sector environment
the capacity of the administrative structure to operate a multi-pillar system, and
the soundness of regulatory and supervisory arrangements.
The report concludes that:
insufficient attention has been paid to the analyses living conditions of the elderly and on options for expanding the safety net for those outside of the formal pension system
there are instances where the Bank has supported multi-pillar reforms even though there were obvious weaknesses in the country's economic and financial structure
in many countries with multi-pillar systems, pension coverage has not increased. Also, the objective of introducing funded pension schemes meant to increase savings, develop capital markets, and improve labour market flexibility have failed to materialise
the Bank underestimated institutional and capacity weaknesses which affected reforms.
Recommendations made to the World Bank for future improvement include:
ensuring that assistance is tailored to country conditions, and that the minimum initial conditions are in place for multi-pillar reform
ensuring that a plan for technical assistance is put in place so that client capacity is developed
conducting additional research on key issues such as income of the aged, the impact of corruption and governance on pension regulation, competition among funds and capital market development
improving Internal and External Coordination
improvement of internal and external coordination to ensure adequate attention to cross-sectoral issues and to foster consensus-building among stakeholders.