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Governments' failure with pensions/ World Bank suggests 6 instruments for secure pensions

2025-01-28 09:54:51Biznes SHKRUAR NGA REDAKSIA VOX
Governments' failure with pensions/ World Bank suggests 6 instruments for
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Sufficient income in retirement has become a common concern for adults globally.

In a recent document addressing "Income Security for the Elderly," the World Bank notes that additional policies and instruments are needed in addition to contributions to increase income security in old age.

Albania is among the countries that have addressed the advice. Our country is currently involved in a reform to change the pension scheme, which is being carried out with the technical assistance of the World Bank.

Currently, the most important sources of income for the elderly are: continued work; support from family and income from assets accumulated during their lifetime; and benefits received from government programs, financed either by general income or social contributions.

However, the relative contribution and overall adequacy of these resources vary greatly according to levels of development, over time, and between countries.

In developing economies, including Albania, population aging is occurring very rapidly. The World Bank notes serious concerns, as it emphasizes that today's and future retirees are not prepared to provide the necessary income throughout old age.

The bank notes that declining family size and changing social norms will reduce informal incomes among older adults.

In addition, financial literacy is poor for ensuring lifelong savings. The bank suggests that the state will need to play a role in promoting financial security for the elderly.

Despite this growing need, public systems for the elderly usually have low coverage and are insufficient to provide adequate protection for the majority of the elderly. For example, in Albania, according to local statistics, more than half of the elderly have partial pensions, as they have not been able to meet the conditions for a full pension.

The World Bank notes that expanding pension contributions has been problematic in recent decades. The following tips are seen as opportunities to increase income security in old age.

First, review the pension scheme to support the inclusion of women and informal workers in the insurance scheme.

Secondly, the sustainability of the pension scheme should be considered a priority and there should be a continuous consensus from politics and interest groups.

Third, data transparency and standardization of reporting on pension systems in developing countries should be promoted.

Fourth, the growing potential of digital and mobile transactions facilitates pension administration and makes it easier to pay contributions.

Fifth, adults need to become more aware of income security in old age.

Sixth, innovative financial products that support the elderly with income should be developed.

The World Bank suggests that a series of instruments in addition to contributions should be developed to increase income security in old age.

Albania is expected to finalize its pension reform this year, which aims to increase the sustainability of the public pension scheme and increase income security at retirement age./monitor.al

Governments' failure with pensions/ World Bank suggests 6 instruments for


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