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October 2017

08Oct

Occupational Pension Funds (IORPs) & Sustainability: What Does the Prudent Person Principle Say?

By Alexandra Horvathova, Rasmus Kristian Feldthusen & Vibe Ulfbeck (University of Copenhagen) The European Union encourages individuals to save in private and occupational pension funds to complement their state saving-plans. Throughout their lives, employers directly sponsor occupational retirement saving plans, so individual employees may top up their future pensions. While the European Union clearly supports the formation and cross-border participation in these financial vehicles by adopting regulatory framework, the EU has also decided to determine a common investment decision standard...

October 8, 2017
Aging, Articles, Pension design, Regulation, , ,
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08Oct

Is There a Retirement Crisis? Examining Retirement Planning in the Household and Government Sectors

By Andrew G. Biggs (American Enterprise Institute) In response to a widespread perception that households are undersaving for retirement, policymakers have proposed expanding Social Security and establishing supplementary retirement saving plans run by state governments. But these proposals take place against a background of record-high unfunded liabilities for government-run retirement programs. If government entities have either financial or political difficulty funding their existing obligations to retirees, shifting greater retirement provision from households to government could potentially worsen existing shortfalls in...

October 8, 2017
Articles, Funding, Savings, System Sustainability, ,
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02Oct

Do Limits on Institutional Investment Increase Opportunities For Ratings Shopping at the Margin of Investment and Speculative Grade?

By Joseph Kerstein (Yeshiva University - Syms School of Business), Sungsoo Kim (Rutgers Business School - Camden), Murugappa (Murgie) Krishnan (Yeshiva University) Rating agencies are expected to be concerned about their long-term reputation because if they lose the trust of investors their ratings would lose credibility and value. We expect that there is less effective monitoring and hence more opportunities for ratings shopping within speculative grades because pensions and other similar institutions known for effective monitoring are limited by regulatory...

October 2, 2017
Adequacy, Articles, Investing
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02Oct

Tonuity: A Novel Individual-Oriented Retirement Plan

An Chen, Peter Hieber & Jakob Klein (University of Ulm - Department of Mathematics and Economics) For insurance companies in Europe, the introduction of Solvency II leads to a tightening of rules for solvency capital provision. In life insurance, this especially affects retirement products that contain a significant portion of longevity risk (for example conventional annuities). Insurance companies might react by price increases for those products, and, at the same time, might think of alternatives that shift longevity risk (at...

October 2, 2017
Articles, Funding, Investing, Pension design
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02Oct

Life Insurance as a Retirement Income Tool

By Russell DeLibero & Wade D. Pfau (The American College; McLean Asset Management) Given its tax-preferential treatment, careful study is warranted to determine whether life insurance can play an important role in an overall retirement portfolio. This study develops hypothetical scenarios for different types of individuals with varying ages and distribution periods, while using a historical outlook to determine the proper structure of a variable universal life insurance policy. We compare a variable universal life policy to different investment vehicles...

October 2, 2017
Adequacy, Articles, Labor Market, Savings,
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September 2017

24Sep

Pension Schemes, Taxation and Stakeholder Wealth: The USS Rule Changes

By Emmanouil Platanakis (University of Bath) & Charles Sutcliffe (University of Reading) Although tax relief on pensions is a controversial area of government expenditure, this is the first study of the tax effects of a real world defined benefit pension scheme - the Universities Superannuation Scheme (USS). First, we estimate the tax and national insurance contribution (NIC) effects of the rule changes in 2011 on the gross and net wealth of the sponsor, government, and 16 age cohorts of members,...

September 24, 2017
Articles, Management, Regulation, Savings, ,
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24Sep

Simplifying Choices in Defined Contribution Retirement Plan Design: A Case Study

By Donald B. Keim (University of Pennsylvania) & Olivia S. Mitchell (University of Pennsylvania; National Bureau of Economic Research) The growth and popularity of defined contribution pensions, along with the government’s increasing attention to retirement plan costs and investment choices provided, make it important to understand how people select their retirement plan investments. This paper shows how employees in a large firm altered their fund allocations when the employer streamlined its pension fund menu and deleted nearly half of the...

September 24, 2017
Articles, Investing, Labor Market, Savings,
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23Sep

Asset Management Market Study Final Decision: Market Investigation Reference (MIR) on investment consultancy services and fiduciary management services

By FCA This document sets out our final decision to make a Market Investigation Reference (MIR) in relation to investment consultancy services and fiduciary management services. Alongside our interim report of our Asset Management Market study we provisionally decided to make a MIR. We received a number of responses which we have carefully taken into account when reaching our final decision. In addition, the three largest investment consultants offered us a package of undertakings in lieu (UIL) of a reference to...

September 23, 2017
Articles, Books, Investing, Regulation
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22Sep

Using Behavioral Science to Increase Retirement Savings

By Andrew Fertig, Jaclyn Lefkowitz & Alissa Fishbane We all deserve a dignified retirement, yet for many of us saving enough remains an obscure, unrealized goal. In an ideal world, planning for our retirement would begin with our first job, continue throughout our working years, and end in sufficient savings for a comfortable future. This pathway may be possible for the few among us with employer-provided pensions, where someone else handles all the planning and saving. Yet trends in the retirement...

September 22, 2017
Articles, Investing, Savings, Slider-Left, System Sustainability, , , , , ,
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20Sep

The Economic Importance of Financial Literacy: Theory and Evidence

By Annamaria Lusardi & Olivia S. Mitchell In this paper, we undertake an assessment of the rapidly growing body of research on financial literacy. We start with an overview of theoretical research which casts financial knowledge as a form of investment in human capital. Endogenizing financial knowledge has important implications for welfare as well as policies intended to enhance levels of financial knowledge in the larger population. Next, we draw on recent surveys to establish how much (or how little)...

September 20, 2017
Articles, Investing, Savings, , ,
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