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World Bank Pensions Core Course 2010November 8 to 19, 2010
Washington, D.C. Room MC C2 - 131
DRAFT COURSE AGENDA
as of July 6, 2010
This course aims to provide policymakers and other stakeholders in developing countries
with an overview of the approaches for analyzing pension systems and policy and institutional
reform options. The course reviews the lessons from recent pension reforms around the worldand uses team exercises for participants to explore reform options for developing country
examples. Speakers include recognized experts in Pensions from the World Bank as well as
from other international organizations.
The agenda includes the application of different pedagogical methods including:
instructional presentations on the key approaches to the design and reform of public and privatepension systems and institutional development challenges;
presentations and applied cases using a diagnostic methodology and modeling techniques;presentations from select case studies illustrating the challenges and lessons learned from
different reform measures employed; and
hands-on participatory workshop sessions in which course participants will work in groups todesign reform programs for country cases which apply the instructional content.
The program agenda is organized as follows:
Day 1Monday Introduction: Framework for Pension Analysis and Pensions ConceptsDay 2Tuesday Pensions Identities and Design Options
Day 3Wednesday Design Options (Cont.)
Day 4Thursday Diagnostic Techniques and Tools
Day 5Friday(shortened session)
Country and Regional Experiences
Day 6Monday Governance and Investment ManagementDay 7Tuesday Administration, Regulation, and Supervision
Day 8Wednesday Special Issues
Day 9Thursday Special Issues (Cont.)Day 10Friday
(shortened session)
Presentation of Group Reform Programs
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Day 1: Introduction Framework for Pensions Analysis: Concepts
Monday, November 8
8:30-9:00 Registration & Breakfast
9:00-
10:00
Welcome to Participants Opening RemarksObjectives, Format, Logistics Open Discussion by Course Participants of Expectations and Desired
ResultsArup Banerji (World Bank) and Robert Holzmann (World Bank)
10:00-
10:30
Introduction to Course Organization
Mark Dorfman (World Bank)
10:30-
11:00
Coffee Break
11:00-
12:30
Session 1: A Framework for Analysis of International Pension
Objectives, Challenges and Reform Issues Objectives of public and private pension systems Common challenges: Global Aging, Globalization, Changes in Family
Patterns, Long-term International Financial Market Trends Metrics for evaluation: adequacy, affordability, predictability, equity,
sustainability and robustness
Dimensions of reform: changes to pension architecture, parameters,funding strategy, risk-sharing
Role of governments, employers, employees, families, mix of risk-sharing
Robert Holzmann (World Bank)
12:30-
2:00
Lunch Break
2:00-3:30 Session 2: Pension Concepts
Demographic parameters: fertility, mortality, longevity, disability Economic parameters: wage growth, interest rates, rates of return on
pension assets, discount rates
System qualifying conditions: firm size, minimum income thresholds,vesting requirements
System benefit parameters: accrual rate and target replacement rate,contribution rates and income thresholds, retirement age, valorization,
benefit indexation System contribution rates, floors and caps on covered wages, basic
salary verses total compensation
Tatyana Bogomolova (World Bank)
3:30-4:00 Coffee Break4:00-5:00 Workshop Session 1: Introduction to Group Projects
Objectives of the Group Exercises Formation of Working Groups Discussion of Objectives, Work Plan and Expected Outcomes Distribution of Template for Group ExercisesMark Dorfman (World Bank)
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Day 2: Pension Identities and Design Options
Tuesday, November 9
9:00-
10:30
Session 3: Pension Identities
Relationships between input parameters and system qualifyingconditions and benefits and long-term system financial sustainability
Key roles of retirement age, contribution rate, and accrual rate Identities and relationships for defined-contribution schemes includingwage growth, interest rates, inflation, and annuity factors Impact on system sustainability and benefits of changes in key
demographic and economic parameters
Tatyana Bogomolova (World Bank)
10:30-
11:00
Coffee Break
11:00-
12:30
Session 4: Earnings-related Partially Funded and PAYG Schemes
Objectives, Parametric Reform Options and Experience
Relationship between qualifying conditions, contributions, benefits,and long-term system financial sustainability (continued)
Rationale behind parametric reforms: limiting present or future fiscalburden Clarifying pension objectivessetting parameters consistent with
objectives: targeted population, income replacement, minimum
income support/insurance against poverty, coinsurance of other risks,system sustainability
Reforming qualifying conditions: firm size, minimum incomethresholds, vesting requirements
Reforming contribution rates Reforming benefit parameters: accrual rates, retirement age,
valorization, benefit indexation
David Robalino (World Bank)12:30-
2:00
Lunch Break
2:00-3:00 Session 5: Funded Schemes, 2nd
Pillar Reforms and Modifications Funding options Enabling conditions for introducing funded schemes Benefits and risks of funded schemes and who bears which risks Centralized verses decentralized Investment responsibilitycentral, corporate, individual Necessary conditions for privately-managed funded schemes Options for funding transition costsAnita Schwarz (World Bank)
3:00-4:00 Session 6: Non-financial (Notional) Defined Contribution Schemes
Rationale Technical framework Pros and cons, benefits and risks Results to dateRobert Holzmann (World Bank)
4:00-4:30 Coffee Break
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4:30-5:30 Session 7: Civil Service Pension Design and Reform Options: The
Case of the United States Thrift Savings Plan
Backgroundcore objectives for the TSP Contribution and benefit design Investment policy and strategy Information infrastructure Efficiency levels achieveCase Study: Pension Reform in ChinaJim Petrick (Thrift Savings Plan)
Welcome Reception: 6:00pm-8:00pm
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Day 3:Design Options (Cont.)
Wednesday, November 10
8:30-9:00 Breakfast
9:00-
10:30
Session 8: Occupational Pension Schemes and Other Voluntary Pension
Arrangements Design options Regulatory and supervisory requirements Tax incentives Impact on increasing pension savingsRichard Hinz (World Bank)
10:30-
11:00
Coffee Break
11:00-
12:30
Session 9: Civil Service Pension Reform Needs and Options
Objectives and constraints: Fiscal sustainability, the package of incentives toattract and retain public servants
Typology of civil service schemesintegrated/parallel with public schemes Alignment of labor market incentives between public and private sector
workers Achieving portability for labor market efficiency Financing strategies Reform optionsEd Whitehouse (OECD)
12:30-
12:45
Group Photo Session MC Atrium
12:45-
2:00
Lunch Break
2:00-5:30 Session 10: Symposium on Global Aging: Implications for Pensions, Labor
and Financial Markets
Aging Patterns Worldwide: Mark Dorfman
Implications for Labor Markets: David RobalinoImplications for Financial Markets: Robert Holzmann
Policy Responses: Robert Holzmann and David Robalino
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Day 4: Diagnostic Techniques and Tools
Thursday, November 11
9:00-10:30 Session 11: Mapping out a Reform - The Diagnostic Process
A. Assessment of the Prevailing Environment Demographic Economic Financial and Institutional Informal Support to the Elderly
B. Assessment of the System Design Structure (zero Pillar, 1st Pillar, 2nd Pillar, 3rd Pillar, 4th Pillar) Qualifying Conditions Parameters (for contributions, DB schemes, points schemes,
NDC Schemes, DC Schemes, Indexation)
C. Performance Indicators Coverage Adequacy Financial Sustainability Affordability Economic Efficiency Administrative Efficiency Security
Edward Whitehouse (OECD)
10:30-
11:00
Coffee Break
11:00-
11:45
Session 12: The Diagnostic Process Applied to Two Country Cases
Modeling Techniques (Apex, PROST) Benchmarking Environment, Design and PerformanceEdward Whitehouse (OECD)
11:45-
12:30
Session 13: Simulating baseline and reform option scenarios
applying the Pension Reform Options Simulation Toolkit (PROST) The importance of long-term projections of pension revenue and
expenditure streams.
Description of the Model Use of PROST to model baseline trends Required data inputs Options for setting and testing demographic and macroeconomic
assumptions. Options for measurement and valuation of rights for past service. Testing for robustness Options for modeling both parametric and structural reformsTatyana Bogomolova (World Bank)
12:30-2:00 Lunch Break
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2:00-3:30 Session 14: Simulating baseline and reform option scenarios
applying the Pension Reform Options Simulation Toolkit (PROST
Cont.)
Tatyana Bogomolova (World Bank) and Asta Zviniene (World Bank)
3:30-4:00 Coffee Break
4:00-5:30 Group Discussion of Pension Reform Needs and OptionsApplying
the Pensions Diagnostic Methodology
This session will consist of a hand-on group exercise in whichparticipants apply the diagnostic tools introduced during the course of
the day, formulate reform options, and evaluate the long-term financialimpact of such options.
Application of the diagnostic methodology to two case studies Benchmarking performance using the World Bank Pensions Database Examining Pension Entitlements with the Axia Apex model Simulating reform options using PROSTEdward Whitehouse (OECD), Mark Dorfman (World Bank) andTatyana Bogomolova (World Bank)
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Day 5: Country Experiences
Friday, November 12
8:30-9:00 Breakfast
9:00-10:30 Session 15: Pension Reform Challenges and Trends in The
Middle East and North Africa Common characteristicseconomic composition, pension
system architecture, coverage Common design characteristicsdefined benefit PAYG,
provident funds, social pensions
Common reform designs Remaining issues to be addressedGustavo Demarco (World Bank)
10:30-
11:00
Coffee Break
11:00-
12:30
Session 16: Pension Reform Challenges and Trends in
Latin America
Economic characteristicseconomic composition, pensionsystem architecture, coverage
Pension design characteristics and recent reform measuresdefined benefit PAYG, 2
ndpillar reforms, regulated
voluntary occupational schemes, social pensions
Common challengescoverage, compliance, competition,cost
Rafael Rofman (World Bank) and Gonzalo Reyes (World
Bank)
12:30-1:30 Lunch Break
1:30-2:30 Session 17: Pension Reform Challenges and Trends in
Europe and Central Asia
Common reform needsimproving fiscal sustainabilityand incentives Common approaches Recent adjustments in multi-pillar schemes Continuing challenges: coverage and costsAnita Schwarz (World Bank)
EARLY DISMISSAL
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Day 6: Governance and Investment Management
Monday, November 15
9:00-10:30 Session 18: Pensions Governance
Guidelines for Governance of Private Pension Funds Application of the Guidelines to Public Pension Funds Governance Experience in OECD Countries Governance Challenges in Developing Countries Approaches to Improving Pension GovernanceJuan Yermo (OECD)
10:30-
11:00
Coffee Break
11:00-
12:45
Session 19: Pension Investment Management Framework Governance Structure Investment Policy Investment Management Risk Management Performance Measurement Accounting and ReportingSudhir Rajkumar (World Bank)
12:30-2:00 Lunch Break
2:00-3:30 Session 20: Challenges of the Design of Annuitization Requirements for development of private annuities markets Annuitization of public schemes- best practice parameters Phased withdrawal alternatives Insurance policies to cover longevity risks Reflection on case studies to dateHeinz Rudolf (World Bank)
3:30-4:00 Coffee Break
4:00-6:00 Workshop Session 3: Group Projects
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Day 7:Administration, Regulation and Supervision
Tuesday, November 16
9:00-10:30 Session 21: Pension AdministrationCollections and Data
Management Collection of pension contributions Institutional setup and operational requirements Organization of information flows Issues in collection unification with other programs Reforms with instituting individual accounts Cost implications of various options General IT requirements Key decisions in developing/procuring MIS Operational innovations in expanding the coverage Public policy choices surrounding personal identification
numbers
Lawrence Thompson (Consultant) and Oleksiy Sluchynskyy(World Bank)
10:30-11:00
Coffee Break
11:00-
12:30
Session 22: Pension Administration Design and Reform
Options (Cont)
Administration of benefit payments Institutional setup Identification of members Handling and decision making on claims Setup of disability identification and payments Survivors provisions and payment administration Payment systems and methods Innovative solutions in identifying members Options with payment service providers Issues in universal pension program management Cost implications of different design optionsLawrence Thompson (Consultant) and Oleksiy Sluchynskyy
(World Bank)
12:30-2:00 Lunch Break
2:00-3:30 Session 23: Regulatory Reform Existing conditions- common law vs. Napoleonic code
approaches; pre-existing architecture of enabling laws (trust
law, companies laws, labor laws)
Objectives of pension regulatory reform Sequencing of regulations Complementary reforms to financial market laws, labor market
regulations
Richard Hinz (World Bank)
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3:30-4:00 Coffee Break
4:00-5:30 Session 24: Supervision of Public and Private Pension
Systems
Different approaches and models on pension supervision Interface between Pensions and other financial market
supervisors
Integrated vs. specialized pension supervision
Risk-based supervisionRichard Hinz (World Bank)
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Day 8: Special Issues
Wednesday, November 17
8:30-9:00 Breakfast
9:00-
10:30
Session 25: Coverage and Social PensionsCharacteristics and Needs of Rural Workers and Retires
Matching Defined Contribution Approach Links between Pre-
and Post-retirement Subsidies.Robert Palacios (World Bank) and Oleksiy Sluchynskyy(World Bank)
10:30-
11:00
Coffee Break
11:00-
12:30
Session 26: Survivorship Benefits in Social Security
Schemes
Approaches to survivorship benefits in social securityschemes
Benefit designs and economic effectsEstelle James (Consultant)
12:30-2:00
Lunch Break
2:00-3:30 Session 27: Disability Benefits in Social Security Schemes
Approaches to disability insurance in social securityschemes
Benefit designs and economic effectsEstelle James (Consultant)
2:00-3:30 Session 28: Political Economy of Pension Reform Initial conditions influencing the probability of structural
reform: ambitiousness of the reform, existing implicit
pension debt, coverage of the existing system, government
spending on pensions, history of incremental reforms,preexisting funded plans.
Approaches to maximize the probability of enacting areform.
Approaches to maximize the probability of implementing areform.
What can we learn from the experience of reforms?Robert Holzmann (World Bank)
3:30-4:00 Coffee Break
4:00-6:00 Group Projects
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Day 9: Special Issues
Thursday, November 18
8:30-9:00 Breakfast
9:00-10:30 Session 29: Pensions & the Financial Crisis Effects of declines in asset values and changes in revenue
flows on defined benefit pension schemes
Projected effects of the crisis in four stylized cases Policy responses in the face of the crisisRichard Hinz (World Bank) and Edward Whitehouse (OECD)
10:30-11:00 Coffee Break
11:00-12:30 Session 30: Pension Reform Challenges and Trends in
South Asia Common characteristicsdemographic and economic Characteristics of existing policies and institutions Reform needs and challenges Reform options undertaken and under considerationRobert Palacios (World Bank)
12:30-2:00 Lunch Break
2:00-3:00 Pensions Olympics
3:00-3:30 Coffee Break
3:30-5:30 Session 31: Presentation of Proposed Reform Programs
Groups A , B, C
Course Participants. Chair: Mark Dorfman (World Bank)
6:00-9:00 Closing Dinner
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Day 10: Presentation of Group Reform Programs
Friday, November 19
9:00-
10:15
Presentation of Proposed Reform ProgramsGroups D and E
Course Participants. Chair: Mark Dorfman (World Bank)
10:15-
10:45
Coffee Break
10:45-
12:00
Presentation of Proposed Reform ProgramsGroups F and G
Course Participants. Chair: Mark Dorfman (World Bank)
12:00-
1:00
Closing Session
Summary of Key Points and ConclusionsPresentation of Course CertificatesCourse Evaluations