Eastern Caribbean Currency Union: Selected Issues
IMF Staff Country Reports, April 25, 2024
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- Eastern Caribbean Currency Union: Selected Issues
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Bibliographic details
- Published: April 25, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400272080.002
Summary and scope
- This Selected Issues paper on the Eastern Caribbean Currency Union (ECCU) focuses on efficient, sustainable, and fair pension schemes.
- This annex reviews pension schemes in the ECCU, with a focus on assessing their design and performance and identifying policy options to improve their efficiency, fairness, and sustainability.
- The paper emphasizes the need for a comprehensive review and adoption of further parametric and non-parametric reforms of the pension systems to avoid abrupt and more sizable adjustments in the future and to reduce the risks of old-age poverty.
Assessment of current weaknesses
- Financial sustainability of the ECCU’s defined benefit social security schemes remains under strain.
- Strain largely reflects:
- still relatively low contributions, and
- generous payouts.
- Demographic and labor market pressures increasing fiscal and social risks:
- rapidly ageing population, and
- high labor market informality.
Key findings
- Recent reform efforts have occurred but are insufficient to secure long-term sustainability.
- Without further reforms, there is increased likelihood of abrupt and larger adjustments in the future.
- Current design weaknesses create risks of increased old-age poverty if left unaddressed.
Policy recommendations
- Swift adoption of further comprehensive reforms to address design weaknesses, including both parametric and non-parametric measures.
- Improve coverage to reduce gaps caused by labor market informality.
- Strengthen investment strategy to support fund sustainability.
- Enhance administrative efficiency and transparency in pension schemes.
- Establish automatic adjustment mechanisms to reduce the need for abrupt discretionary policy changes.
Source: Eastern Caribbean Currency Union: Selected Issues, April 25, 2024, International Monetary Fund.
Content in this bundle
- Eastern Caribbean Currency Union: Selected Issues; March 22, 2024