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Innovation, Fiscal Prudence and Social Equity in the Social Security Reforms of Northern Cyprus

Author

Listed:
  • Hasan Ulaş ALTIOK

    (Doğu Akdeniz Üniversitesi)

  • Glenn Paul JENKINS

    (Doğu Akdeniz Üniversitesi, Queen's University)

Abstract

This paper contains a quantitative assessment of the innovative social security pension reforms in Northern Cyprus that were introduced in 2008 and later refined in 2012.A set of estimations are carried out to determine whether the reforms were sufficient to make the system self-financing. The key question is whether the contributions over a participant’s working life would currently be sufficient to finance the pension promises throughout retirement. It is found that although significant improvements have been made, in the structure of the system to adjust the pension benefits for the past experience of inflation and to prevent the artificial increase of pension rights for those near for retirement, the new system is neither fiscally neutral nor socially equitable. Without further adjustments to either the contribution rates or to the benefit formula, it will require budget subsidies to be sustained. For individuals it provides a great subsidy to high-income participants compared with the subsidy received by those with lower incomes. The major beneficiary group is rich widows. Recommendations are made for policy changes to correct these defects.

Suggested Citation

  • Hasan Ulaş ALTIOK & Glenn Paul JENKINS, 2015. "Innovation, Fiscal Prudence and Social Equity in the Social Security Reforms of Northern Cyprus," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 30(349), pages 77-98.
    • Handle: RePEc:iif:iifjrn:v:30:y:2015:i:349:p:77-98
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    Citations

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    Cited by:

    1. Amin Sokhanvar & Glenn P. Jenkins & Hasan Ulas Altiok, 2019. "The Political Economy of the Taxation of Individuals in North Cyprus," Development Discussion Papers 2019-01, JDI Executive Programs.
    2. Glenn P. Jenkins & Amin Sokhanvar & Hasan Ulaş Altıok, 2021. "Reforming the Individual Direct Taxation System of North Cyprus," Development Discussion Papers 2021-08, JDI Executive Programs.

    More about this item

    Keywords

    Pay-as-you-go; Social Security; Pension Liabilities; Replacement Rate; Implicit Subsidy; Northern Cyprus.;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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