Bank assistance to pension reform and the development of pension systems

This evaluation presents an independent assessment of the Bank's support for pension reform activities focusing on the period from 1994-2004, being the first comprehensive Independent Evaluation Group assessment of the Bank's involvement in pension reform, it evaluates the implementation of the Bank's strategy and the resulting development outcomes. Since 1984, the Bank has assisted 68 countries with reform of their pension systems through more than 200 loans and credits. The Bank supported a wide variety of pension reforms through analytical and advisory services and lending operations, and issued over 350 papers and publications on pension reform. The breadth of research on pensions covers a broad range of topics. Fiscal and regulatory issues, in particular, have been the focus of substantial analysis. However, analyses of the living conditions of the aged tended to be perfunctory, and few studies empirically investigated the limits of formal pension coverage or ways to increase it. Bank operations helped countries build institutional capacity to strengthen the administration of tax-financed pension systems, and the regulation of funded pensions, providing relatively more assistance to multi-pillar reformers. Eighty-seven percent of all projects with a pension component and 75 percent of the pension components themselves were satisfactory in terms of their evaluation outcome. However, case studies analyzing the longer term impact of the reforms found that outcomes varied widely across countries, and depended on the depth of analyses, initial conditions, institutional capacity and political commitment. This evaluation has several recommendations. First, to ensure well-tailored assistance to country conditions and consistent policy prescriptions, the Bank needs to implement guidelines for the development of pension operations, with particular attention to the minimum macroeconomic and financial sector, preconditions necessary for a multi-pillar reform; second, adequate client capacity needs to be ensured to implement pension reform; and, third, the Bank should conduct additional research on high priority issues, such as income of the aged, the impact of corruption and governance on the feasibility of effective pension regulation, and ways in which to stimulate capital market development and competition.