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SOC246H1 (58)

Soc aging- March 23.doc

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Markus Schafer

The welfare state, financial security and generational politics main topics 1. overview and history of pension systems 2. whats been behind worldwide pension reform? 3. Canada 4. intergenerational similarity or conflict?  Pension and old age security represent part of social contact implicit in modern welfare states - social contact : we get into society to avoid – in it for itself - believe we are better together Otto van bismarck, chancellor of germany  unified germany  national insurance program – each person could have a working earning record in the labour force – people can cumulative credits from working in the labour force- then cash out and the government would redistribute income to them later on in life - an acknowledge of their time in the work force  he believes you should be 70 before you qualify a pension plan after germany (1898) other nations followed:  UK (1911)  Itay, spain portugal (1919)  canada (1927)  france ( 1928)  US (1935) The next major influence: William Beveridge (social insurance and allied service , 1942)  it should apply to everyone and financial to the state budget not the work force contributions − Modern pension plan influenced by both beveridge and bismarck insurance policy and included with individual savings  pay as you go – the dominant system in the industrialized west. This is a funding scheme where current workers pay into the funds scheme where current workers pay into the funds for current retirees  defined benefit- employer and employ contribute with the employers guaranteeing a fixed pension payment on retirement, defined in relation to the employee's age, year of service and highest income  defined contribution- pension plan which determines how much the employy and employer contribute to the fund, which is then transferable to the employee when he/she leaves employment. The payment level, however, is not guaranteed. Pension payment is dependent on market investment Contemporary Pension Reform  financial problem due to population aging  unstable and shift and not able to pay people back – unsustainable promise  declining fertility rate 1) movement away from pay as you go system, reliance on current worker contribution – thoughts are undermind – the fairness in generations – e.g. My tax rate compare to the people in the future's tax - it flexible alter – can't rewind and make certain people pay more tax 2) maintaining pay as you go but modifying it a. delaying pensionable age – increase the age for pension edibility replacement rate- income on retirement − canada is lowest from 20 percent and france is the highest b. reducing benefits - receiving the same rate no matter what your formal income and mean testing c. increase contribution -increase tax 3). modifying employment and savings behaviours - increase life long savings 4). shifting from defined benefits to defined contributions -defined benefits – occupational nature/ history and people will earn credits and guarantee pension - defined contribution – the individual – the money they inv
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