Our Research

In this paper, written in collaboration with D3P Global, we review pension programmes targeting informal sector workers in 11 emerging and developing economies. We emphasise the role of financial incentives in encouraging workers to save for retirement. Our results show that tax incentives alone are unlikely to attract a large number of informal sector workers, and that additional incentives such as matching contributions, bundling with insurance, or ‘second generation’ auto-enrolment are necessary. A second wave of pension programmes using some of these incentives has shown signs of success in a select number of countries. Based on this analysis, we make a number of recommendations on preconditions, incentives, product features and implementation for pension programmes for informal sector workers.

In this paper, the UK pension system is examined, highlighting its significant challenges, including high fragmentation, low contribution rates, insufficient state pensions, and inadequate coverage for specific demographic groups. The paper traces the historical evolution of pensions, particularly the shift from Defined Benefit (DB) to Defined Contribution (DC) schemes, and discusses the impact of global financial crises. It advocates for comprehensive reforms such as consolidating pension schemes, increasing contribution rates, and fostering domestic investment. The authors also propose a more strategic, purpose-driven system to ensure financial security. This draft will be updated with a final paper before the end of 2024.

In this paper, the UK pension system is analysed, highlighting its position as the third largest globally in terms of total assets but facing significant challenges compared to other countries. The paper explores the system’s reliance on defined benefit schemes, higher exposure to bonds, and relatively low investment in the UK economy. It also identifies key issues such as low workplace pension contributions, the insufficiency of state pensions, an aging population, and fragmented funds. Solutions tested in other geographies are proposed, including pension fund consolidation, increasing state pensions, and enhancing minimum contributions.

In this paper, we present a novel idea to address issues faced by pension systems in developing and emerging economies: direct funding of pensions through international aid. In our system, aid from domestic and international donors would be used to finance matching contributions, thereby increasing the capital saved for retirement and simultaneously incentivising individuals to save. Furthermore, aid would directly arrive in a worker’s retirement savings account without passing through government budgets, allowing for strong transparency and the ability to “follow the money” by both donors and recipients. We believe that this idea addresses some of the key shortcomings of past pension policies, as well as protects pension savings from changing government priorities. This new paper is a revision from a previous publication from the Coller Pensions Institute in November 2023.

In this paper, we present a solution-oriented idea to combine the building of a resilient pension system and the privatisation of state assets: privatisation through pension funds. Many countries face the challenge of establishing or developing retirement systems while seeking to professionalise the management of state assets. Under the right conditions, privatisation through pension funds can contribute to both outcomes and should be considered by policymakers. The key difference to the traditional privatisation of state assets is that this idea would keep ownership of the asset with the population and spread the profit among a country’s population in the form of future retirement income. Privatisation through pension funds, therefore, constitutes a form of democratisation of a nation’s wealth.