The future of Private and Public pension provision in the next five Essay

The future of Private and Public pension provision in the next five years in Mauritius - Essay Example Pension system is Mauritius was established in the early 1950s, non-contributory pensions are now received by the majority of the residents aged over 60 (Willmore, 2003, Vittas, 2003). Since 1974 pension coverage in the country has been universal, i.e. there is a fixed division into four age groups (60-74 years old; 75-85; 86-99 and 100+, due to overall longevity in the state). The average basic universal pension is about 57 USD (Bailey, 2004, Gopee, 2006). In Mauritius, non-occupational pension consists of several components, such as Basic Retirement Pension, the National Pensions Fund and the Civil Service Pension Scheme and is regulated by strong legal basis (Philip, 1995). Non-occupational pension schemes include basic retirement pension, financed from general taxes, and its current ratio constitutes 3 per cent of annual GDP, but an estimated ratio for 2020 is 6 per cent (GAD, 2001a), due to the ageing trends in population structure. National Pensions Fund is also a part of non-occupational pension provision, as the NPF is an obligatory model which takes into account all private sector organizations employees, excepting those who gain very low wages and some workers involved into sugar industry. Compulsory contributions constituting about 3-9 per cent of overall earnings result in the accumulation of points on the basis of the declared cost of a point for the certain period (Willmore, 2003). National Savings Fund is a third compone nt of non-occupational pension provision and requires of participants certain contributions (2-3 per cent of income) on the mandatory basis (Mauritius Modernizing and Advanced Pension System, 2004). The NSF funds are normally invested into government security, thus the resources themselves are not accumulated, but spent immediately after the employee’s contribution. The other universal social aids and assistances under the NPS’s responsibility include: 1)