The document outlines an outcomes-focused framework for assessing pension systems. The framework aims to start by defining the ultimate objectives for pensions, like efficiency, sustainability, security, coverage and adequacy. It then evaluates how well different features of a pension system, such as its regulatory environment, market structure, and supervision, achieve these outcomes. The assessment can be used to holistically review an existing system or design a new one. It provides a grid to match key system features to their impact on outcomes and drive strategic pension reforms.

1. Outcome Focused Assessment
Framework for Pensions
Will Price
World Bank Pension Core Course
April 2013

2. An outcome based assessment aims to start with the ultimate
objectives we want to achieve and then set out the reforms
most likely to achieve those objectives.
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Economic and political
Environment
Overall Framework –
other pillars and key rules
Supervision
Market Structure, Entities
and Conduct
Efficiency
Sustainability
Security
Coverage
Adequacy
Pension System Features Ultimate Outcomes

3. The reviews are driven by what works to improve outcomes
– the evidence comes from a wide range of sources
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Efficiency
Sustainability
Security
Coverage
Adequacy
Standards
Working papers/case
studies
Global and regional best
practice (World Bank,
OECD, IMF, EU etc.)
Academic and private
sector research

4. Each review should focus on the core issues that drive
outcomes. Reviews can scale to the time available
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•e.g. Scale
•Long term investment strategy
•Cost control and transparency
Efficiency
• e.g. Liability risk management
• Automatic adjustment mechanisms
• DB recovery plans supervised
Sustainability
• e.g. Income till death
• Internal Controls
• Objectives of Supervisors (and other IOPS standards)
Security
• e.g. Rules on participation
• Labor market informality
• Reach of market providers
Coverage
• e.g. Level of contributions
• Enforcing contributions
• Exit and withdrawals
Adequacy
Impacts/Ultimate
Outcomes
Key features driving outcomes
(full list of features available on request)

5. The completed Outcomes Focused Assessment Framework
can then be used as an integrated grid.
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Efficiency Sustain-
ability
Security Coverage Adequacy
Environment
Framework
Markets
Supervision
In a strategic reform all elements may be in play. For specific reviews only
supervision, or only efficiency may be under review.

6. The grid gives an example of how the country features and ultimate outcomes
can be reviewed in a joined-up way. If a review is very targeted e.g. only
supervision the grid also shows which elements are outside the control of the
supervisor
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Ultimate Outcomes
System Feature
Efficiency Sustainability Security Coverage Adequacy
Country and
Financial System
Environment
e.g. political
direction of
investment
allocation
e.g. govt.
contribution debt
or tax financed
e.g. political
consensus for
pension system
e.g. level and
trends in labor
market informality
e.g. wage &
employment growth
Framework and
Regulation
e.g. controls on
fees, default
investment fund
(inc rules on invest
domestic v foreign)
e.g. auto
adjusting
retirement age
e.g. rules for
annuity v lump sum
e.g. auto-
enrolment to
‘nudge’ increased
coverage, or
mandatory
e.g. size of other
pillars & level of
contribution
Market Structure and
Conduct
e.g. strength of
demand side +
scale providers
e.g. quality long
term governance
including
disclosure
e.g. public
disclosure and
quality internal
controls
e.g. whether firms
provide accounts
to small/med
customers
e.g. ‘churning’ of
customers accounts
Supervision e.g. focus on
investment
governance
e.g. risk based
controls on
solvency
e.g. fit and proper
and ultimate
beneficiary checks
e.g. check
employers enrol
staff
e.g. checks on record
keeping and payment
of contributions
Matching key features of a pension system to their impact on outcomes

7. Conclusions
• An Outcome Based Assessment is a tool to ensure the current state and future
vision are clearly identified to aid reform programs
• Can be used to set out design of a new system or assess an existing one
• Approach for private pensions and public pensions share a common core.
• Integrated or multi-pillar reviews a powerful approach
• Outcome Based Assessment can also be carried out on one part of a system, or
for one outcome.
• OECD/IOPS standards part of assessment framework
• Funding likely to be available to pay for a review – expressions of interest
welcome
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8. Will Price
willprice@worldbank.org
www.worldbank.org/nbfi/pensionfunds
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