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OECD‐BANQUE DU LIBAN INTERNATIONAL CONFERENCE ON FINANCIAL EDUCATION:

OECD‐BANQUE DU LIBAN INTERNATIONAL CONFERENCE ON FINANCIAL EDUCATION:. BUILDING FINANCIALLY EMPOWERED INDIVIDUALS By: Dr. Omar Razzaz Beirut, October 20, 201 0. Outline. Introduction: Why now? why do so many low income consumers fail to save their money in financial institutions?

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OECD‐BANQUE DU LIBAN INTERNATIONAL CONFERENCE ON FINANCIAL EDUCATION:

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  1. OECD‐BANQUE DU LIBAN INTERNATIONAL CONFERENCE ON FINANCIAL EDUCATION: BUILDING FINANCIALLY EMPOWERED INDIVIDUALS By: Dr. Omar Razzaz Beirut, October 20, 2010

  2. Outline Introduction: Why now? why do so many low income consumers fail to save their money in financial institutions? Elements of Reform The Case of Jordan Social Security Future Opportunities for Lebanon and Jordan

  3. Why Now? • Recent financial crisis: • Scale: Vast increase in financial retail services (saving and borrowing) not matched by adequate regulation, supervision, and protection. • Rapid increase in complex financial products: Even those who are supposed to understand the financial products…. Don’t!!!!! • “complex financial products combined with frequently opaque marketing and disclosure practices result in problems not just for consumers, but for institutions and investors as well.”*

  4. Why So Many Fail to Save? Poverty! Lack of understanding of basic financial concepts Lack of trust in, and credibility of financial institutions Lack of appropriate instruments that meet their needs

  5. Elements of a Reform Strategy Who supervises? Central Bank, Consumer protection Agency, Specialized institution? Scope of coverage: Investment houses fall through the cracks, leading to pyramid schemes. Disclosure: Simple, plain language, Key Facts Statements, consumer disclosure lies at the heart of robust consumer protection. Information: Provide accurate, easy to understand, and timely information tailored to individual’s need. Addressing complaints: An effective mechanism to monitor and deal effectively with complaints Education: Very important, is prerequisite, but not substitute for the above.

  6. The Jordan Case of Social Security • Social Security: • Not easy to understand • Defined benefits vs. defined contributions • Not easy to mandate • Myopia • Not easy to reform • Who benefits/who pays

  7. Disclosure: Financial Statements

  8. Disclosure: Publishing the Actuarial Study in the Press

  9. دوافع المشروععدم قدرة المؤسسة على الوفاء بالتزاماتها في المدى المنظورنتائج الدراسة الاكتوارية السادسة التي اعدته منظمة العمل الدولية 2036 2016 2026 النفقات <الاشتراكات النفقات >الاشتراكات النفقات > الايرادات تلاشي احتياطيات المؤسسة بشكل كامل

  10. التغيرات الديموغرافية في ضوء • الاقبال على التقاعد البكر • انخفاض معدلات الخصوبة و الوفيات • ظروف سوق العمل 5 مؤمن عليهم 1 مؤمن عليه 1 متقاعد 1 متقاعد

  11. التقاعد المبكر يحمل المؤسسة اعباء مالية كبيرة رواتب تقاعدية اشتراكات

  12. National Dialogue on Reform

  13. Information: Pension Calculation

  14. Information: User Manuals

  15. Information: User Manuals

  16. Information: User Manuals

  17. Complaints: Free Hotline

  18. Complaints: Paper/ On-line Complaint Form

  19. The Jordan Case of Social Security • Education: • What is Social Security? • Image building: “Extension of Family to help face life risks” • What is the issue of financial sustainability? • Image building: Social Security as “Olive Tree” • What is an Actuarial Study? Budget estimate over 40-70 years! Why? • What is the risk of doing nothing? Animation to help explain how funded scheme work and risks involved.

  20. http://www.youtube.com/watch?v=bthjb09nvxs&NR=1

  21. Future Opportunities for Lebanon and Jordan How do you get people to save/invest more? The huge untapped role of Diaspora remittances (from consumption to long term saving and investment) The potential role of public and private pension schemes

  22. The Jordan Case of Social Security • National Dialogue on Reform: • Matrix of consultations, what got adopted, what didn’t, and why? • Information: • Yearly Account Statement • Procedures Guide • On line calculator of pension • Disclosure: • Publish all relevant financials and audited report • Publish Actuarial Study and offer Parliament to hire Actuarian at SSC expense to verify study. • Complaints: • Free Hot Line • Mystery Shopper • Complaint Forms and Boxes in all branches • Central Complaint Office (with a guarantee to respond within 2 weeks) • Address of Government Ombudsman on all Complaint Forms

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