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39 Cards in this Set
- Front
- Back
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Brazil
Social Security Benefits |
General Regime for Private Sector
- mandatory - Eligibility at age 60 or 65 after 15 years of contributions - benefit is 70% of average earnings with additional 1% of earnings or every year of contribution for individuals who joined <1999 - long-service benefits provided - disability benefits = 100% of insured earnings - half of working population covered Special Regime for Public Sector - benefit is 100% of average earnings |
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Brazil
Country Profile |
- Same size economy as Italy
- ranks 2nd in BRIC countries in terms of GDP - 5th largest labor pool, primarily service sector - Mandatory union tax for ee and er, regardless of union status Employment governed by CLT More rigid employment environment than other Latin American countries |
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Brazil
Social Security Financing |
pay-as-you-go
Er contribs are 20% of total pay Ee contribs range between 8% - 11% Ee and er contribs are tax deductible |
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Brazil
Compulsory Benefits and Voluntary Plans |
Complementary Pension Regime
- privately managed and voluntary - managed by closed (similar to pension trusts) and open (managed by banks and insurance companies) pension legal entities - DC plans target retirement income of 50% to 60% of earnings - DB plans target retirement income, including SS, of 50% to 70% of earnings - Retirement age 60 to 65 - Ee contributions rates 5% to 7%, er contribution is 100% match in DC plan - most companies offer DC plans to all ees - most common type of open entity is PGBL, similar to 401(k) |
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Brazil
Delivery of benefits |
Complementary Pension Regime
- benefit payments are 25% lump sum and remaining as programmed withdrawals or life annuity |
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Brazil
Funding and financing of compulsory benefits |
General Regime for Private Sector
- er contributes 20%, ee contributes 11% - ee and er contributions are tax deductible Complementary Pension Regime - closed pension funds can be in the form of DB, DC or hybrid - closed pension funds are favored by large and medium-sized companies, open funds favored by small and medium companies - employee contribs above 12% not tax effective - ee contribs for DC plan are 5% to 7%, 100% er match - contribs to DB plan are 100% er paid and determined by law - pension plans should be fully funded by law - plan participants and sponsors responsible for closing shortfalls |
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Brazil
Investment of compulsory benefits |
- maximum investment in equities is 70% (average is 20% to 30%), 100% in bonds (average is 60%)
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Brazil
Regulatory and tax framework |
Complementary Pension Regime
- pension benefits are taxed as income - contributions to private pension plans are tax-deductible for both er and ee - employees choose between 2 different income tax alternatives (progressive, similar to income tax, or regressive) - open and closed pension funds are covered under different regulatory environment - closed pension funds: not-for-profit entities established on a single or multi-employer basis or by labor unions, assets independent from plan sponsor - open pension fund:entities offer services to ers, ees and self-employed - closed pension funds have to be comprised of a governing board responsible for setting up management regulations, a supervisory board and an executive directorate |
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Brazil
Administration of benefits |
'- 95% of plans are DC or variable contribution
- 9.5% of labor force is affiliated with an occupational pension plan |
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Brazil
Medical and other benefits |
'Most large and medium-sized multinationals provide supplemental healthcare benefits
Other benefits may include subsidized meals/lunch vouchers 57% of companies contribute to the health plan, 43% pay 100% of benefit premium Life programs are most commonly offered to employees of multinationals. Life programs include death, accidental death and disability. Common to provide death cover to spouses and dependents |
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Russia
Social Security Benefits |
Pillar One
- covers most of the population - flat rate SS - Basic component: RUB 2,723 per month - Insured component: calculation formula indexed to general salary increases - retirement age reduced for certain categories of employees |
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Russia
Country Profile |
- economy highly dependent on commodities
- main challenges are lack of innovation, non-diversified economy and declining population - contracts of employment governed by legal provisons and to a lesser extent by collective agreements and individual negotiation |
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Russia
Social Security Financing |
- financed on a pay-as-you-go basis
- as of 2010 ers contribute directly to State Pension, SS and Health funds. Contributions over last 3 years have been 26%, 34% and 30% Current income tax is low (13%) but will likely increase in the future |
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Russia
Compulsory Benefits and Voluntary Plans |
Pillar Two
- Compulsory DC plan, fully-funded - benefit is the sum of the notional account (insurance part) and the value of the individual account (funded part) - very low take-up rate Pillar Three - Voluntary individual plan - One type of provider: pension insurance agreement with insurance company, er contribs are taxed as income to ee but benefits are tax-free - Second type is non-State pension plan, non-profit in nature, er contribs are tax-free but benefits are taxed - 20% of companies provide these plans |
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Russia
Delivery of benefits |
Pillar II
- payout period is number of years between current age of person and average life expectancy |
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Russia
Funding and financing of compulsory benefits |
Pillar Two
- State will match employee contribs up to 12,000 roubles per year for 10 years - Er is legally obligated to deduct 2nd pillar pension contributions and transfer it to pension fund Pillar Three - 'pension insurance agreement' with an insurance company licensed for 3rd pillar penisons or a non-State pension fund |
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Russia
Investment of compulsory benefits |
Pillar Two
- Monies invested either by State pension fund, or directly by employees through private fund managers |
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Russia
Regulatory and tax framework |
Pillar Two
- administration and mgmt by Russian State Pension Fund - non-state funds regulated by Ministry of Finance and Federal Financial Markets Service - Er and ee contribs are tax deductible up to 12,000 roubles per year |
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Russia
Administration of benefits |
Pillar Two
- ees can choose one of 55 pension mgmt companies to manage their pension assets |
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Russia
Medical and other benefits |
Common practice for companies to provide supplementary health care to ees and dependents
Life/AD&D commonly provided by ers |
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India
Social Security Benefits |
Under legislation, companies are obligated to provide retirement, sickness, disability and death benefits
No universal social security system |
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India
Country Profile |
Due to the large number of people working in the informal economy, a major social issue is the low percentage of population covered by social security
- less than 10% of workforce is in the formal organised corporate sector Economy based on agriculture 90% of workforce is informal |
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India
Compulsory Benefits and Voluntary Plans |
Employees' Provident Fund (EPF)
- Compulsory - DC scheme - for ees earning < INR 6,500 and working for er <19 ees - ees covered by an occupational retirement plan that is equivalent to or better than the EPF can contract out Employees' Pension Scheme (EPS) - Voluntary - DB scheme - pays a pension proporational to earnings at time of retirement - benefit rate is 50% of final wage for ees who have contributed at least 10 years - central gov't ees are main contributors to scheme, those who started work before 1/1/2004 don't contribute New Pension Scheme - Voluntary - replaced EPS for gov't ees - Effective 1/1/2004 for gov't ees, 4/1/2009 for all citizens - DC based system - no matching contrib from gov't under open system Gratuity Benefit - Available upon 5 years of service - equal to 15 days' salary per year of continuous service in excess of 6 months |
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India
Delivery of benefits |
Employee Provident Fund
- minimum DB lump sum payment equal to accumulated er and ee contribs plus investment return - retirement age is 55 Employee Pension Scheme - benefits payable at age 58 or on retirement with 10 years of coverage - benefit is based on covered salary, formulaic (pensionable salary x pensionable service) / 70 - Up to 1/3 taken as lump sum NPS - up to 60% of accumulated fund available as lump sum if retiring at age 60 Gratuity Benefit - DB lump sum |
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India
Funding and financing of compulsory benefits |
Employee Provident Fund
- Ee contributes 12% of basic salary, Er contributes 3.67% Employee Pension Scheme - Er contribution 8.33% of salary - Funded on a pay-as-you-go basis by employer NPS - three types of permissible asset allocations - ers can contribute up to 10% of salary as of 4/1/2012, tax deductible to company, no perq tax to ee Employees' State Insurance Act (ESI) - financed by er contrib of 4.75% of pay and ee contrib of 1.75% of pay Gratuity - pay-as-you-go by employer - max taxable allowance for er contrib is 8.33% of salary - can set up a trust, more common to insure |
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India
Investment of compulsory benefits |
Employee Provident Fund
- PF authority announced 8.8% interest on PF accumulation for 2012-13 - EPFO invests funds, but companies can contract out of the Provident Fund. A contracted-out EPF trust must match the interest rate declared on investments each year (9.5% for 2010-2011) and the investment pattern of EPFO (25% central gov't bonds, 15% state gov't bonds, 30% public sector company bonds) NPS - three types of permissible asset allocations |
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India
Regulatory and tax framework |
Provident Fund
- employees earning < INR 6,500 working for an employer >19 ees must enroll in EPF - er and ee contributions are fully tax deductible - lump sums are tax free Employee Pension Scheme - there are limits on tax deductibility - lump sums are tax free up to INR 1,00,000 Pensions are taxed as income ESI system regulates most of the private sector - benefit payable after 3-day waiting period, about 85% of average daily wages WCA covers hazardous employment - benefit payable after 3-day waiting period, about 25% of monthly wages DB plans require valuations for accounting purposes on Indian std AS 15. The new standards Ind AS19 is largely in line with AS 15 |
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India
Administration of benefits |
EPF & EPS have mandated survior benefits payable
- accrued benefit payable at time of death - for EPS, five-year vesting doesn't apply for death benefits |
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India
Medical and other benefits |
Central and State gov'ts have general and specialized hospitals for the public on behalf of the ESIC. Benefits include IP and OP treatement by GPs and specialists at gov't facilities and private institutions contracted with the ESIC
Most companies reimburse medical expenses due to INR 15,000 tax allowance per annum Common practice to allow ees to carry forward unused holidays and cash them out upon leaving service or retiring. Actuarial accounting vals are required for this benefit Traditional DB plans prevalent only in public sector, minority of private sector offer DC Other typical benefits include personal accident, life, car allowance |
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China
Social Security Benefits |
SS plan is broadly in line with World Bank recommendations
Social Insurance Law (7/1/2011) provides for basic pension insurance, basic medical, work injury, unemployment and maternity - Foreign nationals are req'd to be enrolled in the social insurance system - basic pension, medical and unemployment are portable - minimum contrib period for old age pensions is 15 years - Pillar IA is the social pool; Pillar IB is individual accounts - ers subject to notification req'ts - Pension benefit from the social pool is 1% for each year of contribution service multiplied by the average of the revalued contribution base - Monthly benefit from the individual account part is calculated as the accumulated individual account balance divided by a factor - retirement age is 60/55 |
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China
Country Profile |
Economic growth has been driven by investments, net exports and domestic deman led by consumpton
Goals for current 5-year plan include balanced economic growth, "value added" production, reduced reliance on exports, and increased domestic consumption Labor Contracts Law, effective 1/1/2008, don't supersede all earlier labor regulations. Regulations for Labor Mgmt in Foreign-Invested Enterprises still apply in some circumstances City and provincial labor regulations are sometimes more favorable to workers than national laws and regulations |
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China
Social Security Financing |
Contribution rates determined at the provincial level
- er contribs 20% of pay to Pillar IA, min/max of 60%/300% of city average wages - ee contribs 8% of pay to Pillar IB, min/max of 60%/300% of city average wages |
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China
Compulsory Benefits and Voluntary Plans |
Pillar II
- voluntary - er sponsored pension benefit on top of SS pension - key retention practice Enterprise Annuity - gov't advocated and authorized supp pension plan Pillar III - deferred-tax individual pension insurance pilot program will be rolled out the second half of 2012 in Shanghai |
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China
Delivery of benefits |
Enterprise Annuity
- account balance payable at statutory retirement age (60/55), on death, or upon establishing permanent residence outside of China - on retirement, lump sum or installments - on death and emigration, lump sum |
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China
Funding and financing of compulsory benefits |
Pillar II
- insured products have a guaranteed investment return and profit-sharing feature, many products have a DC approach - Few foreign companies provide benefits through a book reserve, not looked upon favorably, no tax deduction on er contribs, benefits become a deductible expense upon payment Enterprise Annuity - fully-funded DC plan with individual accounts - can operate only as a trust, must be managed by qualified service providers - er and ee contribs req'd - limits to contribs apply, er contrib varies by age, length of service, job category - nonqualified supp plans don't receive favorable tax treatment - asset allocation is restricted by EA guidelines (<95% in fixed income securities, <30% in equity mkt, <5% in money market) - foreign investments not allowed |
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China
Investment of compulsory benefits |
Enterprise Annuity
- asset allocation is restricted by EA guidelines (<95% in fixed income securities, <30% in equity mkt, <5% in money market) - foreign investments not allowed |
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China
Regulatory and tax framework |
Social Security
- Ers subject to notification requirements - increased liability for noncompliance Enterprise Annuity - tax incentives for er contribs equal to 5% of payroll - Er contribs are taxable to the ee at progressive income tax rates from 5% to 45%. However, because er contribs aren't aggregated with normal salary and wage income, they are generally taxed at a lower rate than employment income - ee contribution, investment income and benefit payout are taxed - ers req'd to partic in mandatory basic pension and be up-to-date with contrib responsibilities, must be able to make add'l contribs, and need to have collective negotiation process in place - plan must be available to all ees |
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China
Administration of benefits |
Enterprise Annuity
- ees who change jobs can transfer their account to their new er's EA plan - plan provisions and changes must be approved by ees through collective agreement mechanism |
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China
Medical and other benefits |
90% of ers provide supplemental health insurance to ees. All plans are paid completely by the er. Typical plan covers 90% of OP and 100% of IP with combined annual max of CNY 20,000
Pressure on ers to provide dependent coverage for spouses and parents Prevalence of group life insurance is increasing Er liability insurance is used by some ers for various tax and cost reasons to provide death and AD&D coverage to ees - company is the beneficiary, but insured event is death or disablement of ee - company pays claim amount to ee, or beneficiary LTD not common; statutory work injury program is primary source of coverage 30% of ers provide supp housing benefits to ees |
