Posted on 11/30/2005 11:30:54 AM PST by blam
Icelanders richer than Norwegians?
Icelanders are richer than Norwegians when Norway's Oil fund and Iceland's pension funds are compared reports the Icelandic National Broadcasting Service, RÚV.
According to the analyst department of Íslandsbanki, if the value of Norway's oil assets would be divided between the nation, each Norwegian would receive ISK 2.6 million. Icelanders on the other hand would receive ISK 3.8 million if the net assets of the Icelandic pension funds are divided between the nation - almost twice the amount that Norway's oil fund would pay each Norwegian.
Norwegians plan to use the oil fund to pay out future pensions. Norwegian pensions are funded on a "pay as you go" basis; in Iceland, pensions are funded by a compulsory contribution of 10% of gross salaries.
It's all in the seasonings.
Uff Da
What is the dollar equivalent of an Icelandic krona? And what is the mechanism by which Icelandic pensions are calculated? Contributions are flat rate 10%. Is it individual accounts, or is it some type of a transfer scheme?
GSlob: What is the dollar equivalent of an Icelandic krona? And what is the mechanism by which Icelandic pensions are calculated? Contributions are flat rate 10%. Is it individual accounts, or is it some type of a transfer scheme?
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The exchange rate is now 68,48 ISK (Icelandic Krona) for one US Dollar. Contributions to one of our three-tire pension system are a flat rate 10 to 13%, it depends on each pension fund. This part/tire of the system is fully funded, but sadly not based on individual accounts, bur rather I beliewe more similar to the system that teachers in the US have, that is mostly Union based funds that you aquire rights in with your contributions. Those funds also covers disability, and spouse pension and such. But when you die, the fund or rights you have in the pension account are not considered your ownership or inheritance, but instead gobbled up by the fund.
The other two tires of our pension system is an essentially pay-go state funded standard pension that everyone gets, unless they are over a certein amount in other pension payments (158000 ISK monthly), then it starts to reduce by 30% for everything abowe that, so the standard pension disapears if people have 234000 ISK monthly in other pension payments.
On top of that people that have even lower or none at all of other pension funds can apply for additional payments, that start to reduce much faster (45%) if payments reach certein amounts that are lower than in the case of the standard pension. These methods are neccasery because our fully funded pension part/tire was only created in the 70´s so many will not have aquired enough funds, some none at all, f.e. stay at home moms (that used to be much more common than now).
The third, and newest tire, is the additional pension saving scheme, wich are private accounts, that both employers and employee pay into, according to their Union/work contracts.
As is obvious our system is still going through a transition time, when the government helps those that have not aquired themselfs enough of their own savings or pension rights in the pension funds. But if the system is allowed to run its course uninterupted the first tire will gradually disapear, and the other two tires will be tho only providers of pension. Hopefully the third tire will grow in significance with more freedom of choise in the future.
Sadly many left wingers do not see this, and are campaigning for the state funds to be without reductions or limitations, that is essentially campaigning for more money for those that are richer.
When I heard this news while ago about the Norweegian pension funds that I beliewed they put all their oil money into, I was very perplexed. Since then I have learned they have not put all of it into those funds, but contrary to what is stated there in the article abowe I beliewe the oil money in the funds is invested, at least partly, and thus is more or less funded.
But recently they started their own private accounts on top of this, and some in Norway I beliewe want to limit the oil money only for pensions, and I would say they should put the oil money into the private accounts of each and every norweegian.
Actually I would beliewe that kind of a system would be good for many oil rich countries, and provinces, like Iraq and Alaska. I beliewe in Alaska everyone gets a portion of the oil wealth into their accounts, and there are ideas of doing the same in Iraq, to ensure the resource curse will not again befall that nation. As both the US and most middle East countries have problems with their pension systems (social security) I would beliewe here is a solution of both problems.
Best wishes from Iceland, and hopefully the US can maybe learn from us, and the Chilean system and others fully funded systems on how to reform your socialistic pension/social security system,
Leifur
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