Financial Sustainability of the Algerian Retirement System: A Perspective Analysis of the 50 Coming Years

Flici, Farid; Planchet, Frédéric

doi:10.1007/978-3-030-37912-4_13

Cited by 4 publications

(22 citation statements)

References 13 publications

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“…is the average wage of the 5 years before retirement (final wage); for simplification issues, it is noted as w * . Interested readers can refer to Flici and Planchet (2020) for a more detailed overview of the Algerian retirement system.…”

Section: Overview Of the Algerian Retirement Systemmentioning

confidence: 99%

“…Even if the statutory retirement age is 60 years, many options have allowed getting retired starting from the age of 50 years. Also, many workers remain occupied beyond 60 and even 65 years in some cases (Flici & Planchet, 2020).…”

Section: Defining the Possible Scenariosmentioning

confidence: 99%

“…On the other hand, wages vary with age. Flici and Planchet (2020) used the distribution of salaries by large age intervals provided by the household income survey by the Algerian Office of National Statistics [ONS] in 2011 (ONS, 2014). Unfortunately, no data is available for more recent years.…”

Section: Assumptionsmentioning

confidence: 99%

“…However, our variable of interest becomes the ratio of the wage at age x and time t on the average wage at year t (noted as On the other hand, wages vary with age. Flici and Planchet (2020) used the ution of salaries by large age intervals provided by the household income survey by the an Office of National Statistics [ONS] in 2011 (ONS, 2014). Unfortunately, no data is ble for more recent years.…”

Section: Assumptionsmentioning

confidence: 99%

“…Here, the age distribution of wages is assumed to remain the same for the whole period of analysis. Flici and Planchet (2020) fitted the crude distribution of wages by large age intervals with a quadratic function, which allowed them to estimate the wage pattern by detailed ages ranging from 18 to 64. Here, the same function is used to extend the wage pattern until the age of 69 years.…”

Section: Assumptionsmentioning

confidence: 99%

See 4 more Smart Citations

Rethinking the Contribution-Benefit Linkage in Pay-As-You-Go Retirement Systems Based on Algerian Case

Flici

2022

RSP

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In Pay-As-You-Go systems, retirement benefits result from the multiplication of the reference wage by the contribution duration by an annuity rate. This formulation can undergo some adjustments to ensure sustainability within a changing environment. In this paper, we showed that the current contribution-benefit linkage might generate a large gap between individuals in terms of profitability and thus in terms of wealth accumulation over long periods. Considering the possible career scenarios in the Algerian retirement system, we found that return rates vary from 9.6% to 13.2%. To reduce inequality, we propose a new retirement benefit formula partially based on the actuarial fairness principle. Keywords: retirement, PAYG, equality, IRR, scenario, Algeria.

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Section: Overview Of the Algerian Retirement Systemmentioning

confidence: 99%

Section: Defining the Possible Scenariosmentioning

confidence: 99%

Section: Assumptionsmentioning

confidence: 99%

Section: Assumptionsmentioning

confidence: 99%

Section: Assumptionsmentioning

confidence: 99%

See 3 more Smart Citations

Rethinking the Contribution-Benefit Linkage in Pay-As-You-Go Retirement Systems Based on Algerian Case

Flici

2022

RSP

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The limits of parametric reforms in sustaining the Algerian retirement system in a context of population ageing

Flici

2023

Int Social Security Review

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Accelerated population ageing in Algeria threatens the financial sustainability of its pay‐as‐you‐go retirement system. Reform is a necessity, with options ranging from simple parametric reforms to important systemic changes. Prior to undertaking systemic reforms, it is worthwhile to investigate whether parametric reforms can place the system on a financially sustainable footing. In this article, we used a multi‐scenario analysis that crosses the possible reform actions with possible socioeconomic scenarios. The results show that when using the most favourable scenarios, the financial balance of the Algerian system will remain negative in the short and long term. Implementing major parametric reforms can only help reduce the deficit and make it stable over time. Thereafter, systemic reforms will have to be implemented.

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Sustaining Algeria’s Retirement System in the Population Aging Context: Could a Contribution Cap Strategy Work?

Flici,

Dominguez-Fabian

2024

Risks

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Previous research predicts an increasing financial deficit in Algeria’s PAYG retirement system, mainly due to rapid population aging, and parametric adjustments will be insufficient to alleviate this imbalance. Mitigating the effects of population aging will necessitate further intervention. In this work, we analyze how capping contributed salaries can help to mitigate the effects of population aging on the retirement system. Under generous Pay-As-You-Go schemes, promised pension payouts far exceed contributions. Thus, restricting contributions is expected to reduce the burden of future benefits by accepting lower contributions today, while directing public subsidies to low-income individuals. We simulate the future evolution of the financial balance of Algeria’s retirement system under various contributable salary caps versus various scenarios of environmental evolution and potential parametric reform actions. The results demonstrated that a 40% cap, along with major parametric reforms and an ideal environment, would help achieve a cumulatively balanced system in the long run.

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Financial Sustainability of the Algerian Retirement System: A Perspective Analysis of the 50 Coming Years

Cited by 4 publications

References 13 publications

Rethinking the Contribution-Benefit Linkage in Pay-As-You-Go Retirement Systems Based on Algerian Case

Rethinking the Contribution-Benefit Linkage in Pay-As-You-Go Retirement Systems Based on Algerian Case

The limits of parametric reforms in sustaining the Algerian retirement system in a context of population ageing

Sustaining Algeria’s Retirement System in the Population Aging Context: Could a Contribution Cap Strategy Work?

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