Which retirement plan model involves personal pensions purchased through brokers using defined contribution savings?

Which retirement plan model involves personal pensions purchased through brokers using defined contribution savings?

• A. Germany and Belgium
• B. Anglo-Saxon countries
• C. Czech Republic and Israel
• D. Chile and New Zealand

Answer: (C)

The concept being tested is a retirement plan model that relies on individual, defined-contribution savings accumulated in personal accounts and then converted into a pension product purchased through financial intermediaries (brokers). In this setup, people save into defined-contribution accounts, and their retirement income comes from the value of those accounts and the personal pension products they buy, rather than a guaranteed benefit defined by a public or employer plan. The brokers act as the channel through which individuals select and obtain their personal pension arrangements. Czech Republic and Israel fit this description in the course materials because their pension reforms emphasize a private pillar of DC savings managed in individual accounts, with a market for personal pension products sold via brokers or financial advisers. The emphasis is on individual accumulation and market-based purchasing of pension income, rather than a traditional pay-at-age or employer-provided defined-benefit structure. In contrast, other groupings tend to reflect different structures—for example, models more centered on public PAYG or employer-based DB arrangements, or on privatized DC systems with different sales channels—so the described model aligns best with the Czech Republic and Israel grouping.

The concept being tested is a retirement plan model that relies on individual, defined-contribution savings accumulated in personal accounts and then converted into a pension product purchased through financial intermediaries (brokers). In this setup, people save into defined-contribution accounts, and their retirement income comes from the value of those accounts and the personal pension products they buy, rather than a guaranteed benefit defined by a public or employer plan. The brokers act as the channel through which individuals select and obtain their personal pension arrangements.

Czech Republic and Israel fit this description in the course materials because their pension reforms emphasize a private pillar of DC savings managed in individual accounts, with a market for personal pension products sold via brokers or financial advisers. The emphasis is on individual accumulation and market-based purchasing of pension income, rather than a traditional pay-at-age or employer-provided defined-benefit structure.

In contrast, other groupings tend to reflect different structures—for example, models more centered on public PAYG or employer-based DB arrangements, or on privatized DC systems with different sales channels—so the described model aligns best with the Czech Republic and Israel grouping.