Theoretical replacements rates and vulnerable groups (Part 1)

Theoretical replacements rates and vulnerable groups (Part 1)


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Speaker(s): Raffaelo Marcelloni (INAIL)

The Theoretical Replacement Rates (TRRs) express the ratio between the annual pension amount received in the first year of retirement and the annual amount of final salary. They measures the change of the worker's gross income in the passage from the active working life to the retirement period.

The Vulnerable Groups include those workers having discontinuous working careers and weak contribution histories. In such vulnerable groups can be also included the category of the injured workers because they have experienced at least a job leave during their career due to a work injury. As these workers are entitled to compensation and/or a benefit, if we assume to consider this compensation/benefit the same way as an "income from work" (as it is strongly related to the working activity), we can then see how this additional income could affect the TRRs by including it in the calculation.

This work starts with an overall view over the main steps of the last 20 years of reforms of the Italian pension scheme, and it continues introducing both the current Italian old age pension scheme and the Italian worker's compensation system. The aim of this work is to calculate a new category of TRRs, related to injured workers, and to compare it to the TRRs of generic pensioners. The results show how unexpectedly the TRRs of injured workers are generally higher than the traditional ones and, in some instances, their values even exceed the 100%.

What we can conclude is that this example could be a useful idea on how to increase the protection of vulnerable groups for the international actuarial community, for the framework of social protection and for the private sector involved in worker's compensation schemes.

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