Collecting and transferring pension contributions

Collecting social security contributions is an important operational issue in all types of pension systems. Many regimes are plagued by poor compliance and weak, inefficient administration. Some countries have tried to introduce an automatic incentive to contribute by moving systems closer to"actuarial fairness,"where pension benefits are more strictly related to individual contributions. Examples include the systems of individual accounts introduced in a range of countries in Latin America and Eastern Europe. But in these regimes, collecting and transferring contributions is a more complex process. This paper considers different aspects of collecting pension contributions. In the first section the authors describe the most serious problems affecting collection systems in several countries. Section 2 presents the conceptual relationships between alternative pension-system models and collection systems. Section 3 deals with the differences between centralized and decentralized collection systems and their advantages and disadvantages. Section 4 looks at operational issues. Section 5 compares experiences of the collection systems in a range of different countries. Section 6 looks at problems of regulation and supervision, while the final section presents conclusions.Pensions&Retirement Systems,Environmental Economics&Policies,Economic Stabilization,National Governance,Health Monitoring&Evaluation