IPE 360: Financial literacy can lower political cost of pension reform

first_imgA good pension reform was one that triggered changes in behaviour to ensure that it lived on in society, according to Fornero.One of the reasons that reform was so difficult was because it had to involve reducing benefits for some and giving or reducing the burden on other generations, she said.“Don’t believe when they tell you that they’re doing a pension reform where nobody has to pay a price,” she told delegates. “It’s simply something that does not exist in nature.”Fornero said it was important to narrow the gap between the technical and the popular view of pension reforms. She did not like the view expressed by Jean-Claude Juncker, who once said: “We all know what to do, we just don’t know how to get re-elected after we’ve done it.” She and a fellow academic at the University of Turin, Anna Lo Prete, carried out research to test whether this view was empirically justified, and whether the political cost was reduced when people better understand the reform.She said the research, which analysed 20 years of pension reform in different countries, showed that implementing change reduced the chances of a government being re-elected, but that in countries with higher “economic financial” literacy, governments were penalised much less.“This is good news,” said Fornero. “We need to work on financial literacy programmes exactly because we need to involve people in social change.”Harking back to the situation in Italy around the time of the pension and labour market reform she introduced, Fornero said the political parties approved the reform but then attacked them in a bid to rebuild their reputation.“It was of course natural for them to say our work was so bad, which is exactly the opposite of the message that should have been given,” she said.The message should have been that the reform was done for the benefit of the country, and not for any single party, trade union, or interested parties, she said.“It’s difficult but it was worthwhile,” she said. “And the reform is still there.” Financial literacy can help reduce the electoral cost of pension reform, according to research carried out by economics professor and former Italian labour minister Elsa Fornero and a fellow academic.Fornero, who is professor of economics at University of Turin, was the labour minister in Mario Monti’s technocratic government from 2011 to 2013. She introduced a pension reform that helped save Italy from financial collapse, although it was seen by many as amounting to austerity.Speaking at the IPE 360 conference at the London Stock Exchange yesterday, Fornero said public pension systems were full of political risk, as it was easy for politicians to make big promises given that they have a short-term horizon but pensions are long-term.Today that short-term horizon favoured the older generation, she said.last_img read more

Win over England gives Windies first points on Test Championships table

first_imgAMIDST all the excitement and celebration surrounding the West Indies’ four-wicket win over England on Sunday, fans of the Caribbean side might have missed out on something else to celebrate.The hard-fought victory spearheaded by the efforts of Jermaine Blackwood, who scored a match-winning 95, Jason Holder’s seven wickets and Shannon Gabriel’s nine-wicket haul, earned the West Indies their first points on the ICC World Test Championship table for 2019/2021.Under the rules of the championship, each team plays six series, with each series counting for 120 points, distributed over the number of matches in a series. A two-match series will mean 60 points for each Test while a three-match series will give 40 points to each Test match.A tie will be 50 per cent of the points available, whilst a draw will be a 3:1 points ratio.When the West Indies beat England in their three-match #Raisethebat series, the Caribbean side picked up their first 40 points, which sees the side sitting seventh on the table, 16 points ahead of South Africa who have 24 points from seven matches played.Bangladesh have not yet scored after three matches.However, the West Indies, who have only played three matches in the championship so far, have a long way to go if they are to get into the top levels of the standings that are being led by India with 360 points from nine matches played. They have seven wins and two losses.Australia, who have played 10 matches have seven wins, two losses and a draw for 296 points.New Zealand are third with 180 points from their seven matches – the points coming from the three matches won. They have lost four.England are not having a good time of it in fourth with 146 points. Their recent loss to the West Indies means they lost four Tests of the 10 played so far. They also have five wins and a draw.Pakistan 140 and Sri Lanka 80 are fifth and sixth respectively.If the West Indies win their next match against England they will move into a tie on points with Sri Lanka and draw that much closer to Pakistan.The ICC World Test Championship is a league competition for Test cricket run by the International Cricket Council (ICC), which started on August 1, 2019. It is intended to be the premier championship for Test cricket in line with the ICC’s goal of having one pinnacle tournament for each of the three formats of international cricket.In October 2017, the ICC announced that a Test league had been agreed by its members, which would involve the top nine teams playing series over two years with the top two teams qualifying for a World Test League Championship Final.The first ICC World Test Championship started after the 2019 Cricket World Cup from August 1, 2019, with the Ashes series. The second ICC World Test Championship will run from July 2021 to June 2023. (Sportsmax)last_img read more