June 2017

11Jun

We’ll Live to 100 – How Can We Afford It?

The challenges we face to provide our ageing societies with a financially secure retirement are well-known. In most countries around the world, standards of living and healthcare advancements are allowing people to live longer. This should be celebrated, but we should also consider the implications for the financial systems that have been designed to meet our retirement needs, which in many countries are already under severe strain. This report has been produced as part of the Forum’s Retirement Investment Systems...

June 11, 2017
Aging, Articles, Labor Market, Pension design, , ,
Read more...
06Jun

Assessing the Demand for Micropensions Among India’s Poor

By Olivia S. Mitchell (University of Pennsylvania) & Anita Mukherjee (University of Wisconsin) Using new data from a field experiment in India, we test hypotheses about micropension design in a poor population. We elicit demand for the basic micropension in addition to variants with different minimum withdrawal ages, government match rates, and options for lump sum withdrawal. A majority (80%) of respondents report interest in the micropension, and the amount they are willing to contribute would be enough to cover...

June 6, 2017
Articles, Pension design, Savings, ,
Read more...
06Jun

Assessing the Demand for Micropensions Among India's Poor

By Olivia S. Mitchell (University of Pennsylvania) & Anita Mukherjee (University of Wisconsin) Using new data from a field experiment in India, we test hypotheses about micropension design in a poor population. We elicit demand for the basic micropension in addition to variants with different minimum withdrawal ages, government match rates, and options for lump sum withdrawal. A majority (80%) of respondents report interest in the micropension, and the amount they are willing to contribute would be enough to cover...

June 6, 2017
Articles, Pension design, Savings, ,
Read more...
04Jun

Modeling Multi-State Health Transitions in China: A Generalized Linear Model with Time Trends

By Katja Hanewald, Han Li & Adam Wenqiang Shao (University of New South Wales) Rapid population aging in China has urged the need to understand health transitions of older Chinese to assist the development of social security programs and financial products aimed at funding long-term care. In this paper, we develop a new flexible approach to modeling health transitions in a multi-state Markov model that allows for age effects, time trends and age-time interactions. The model is implemented in the...

June 4, 2017
Aging, Articles, Labor Market
Read more...
04Jun

Long-Run Biological Interest Rate for Pay-as-You-Go Pensions in Advanced and Developing Countries

By Masahiro Nozaki (International Monetary Fund) How much of an internal rate of return would a sustainable pay-as-you-go pension system offer current and future generations equally? The answer is the sum of the Long-Run Biological Interest Rates (LBIR), the real-world equivalent of Samuelson's (1958) biological interest rate, and future productivity growth. Reflecting global population ageing, the median LBIR across 172 countries is as low as 1 percent per year. The LBIRs are particularly low in advanced countries, estimated to be...

June 4, 2017
Aging, Articles, Labor Market, Pension design, ,
Read more...
04Jun

Annuities and Retirement Income Planning

By Patrick J. Collins (Schultz Collins) This CFA Institute Research Foundation brief provides a broad-brush survey of the US annuity marketplace as of the end of 2014. It is a short and generic introduction to currently available annuity contracts. It is oriented toward both investors who are contemplating the use of annuities to generate income and hedge longevity risk and their advisers. It does not discuss the literature that evaluates annuities as instruments to enhance utility in the context of...

June 4, 2017
Aging, Articles, Investing,
Read more...

May 2017

28May

Fiscal Challenges of Population Aging in Brazil

By Alfredo Cuevas, Izabela Karpowicz & Mauricio Soto (International Monetary Fund); Carlos Mulas-Granados (Government of the Kingdom of Spain)  In recent decades, population has been aging fast in Brazil while old age pensions and health related spending have increased. As the population ages, the spending trend threaten to reach unsustainable levels absent reforms. Increasing the retirement age is key, but by itself will not provide sufficient savings to close the pension system financing gap, and reforms reducing replacement rates are...

May 28, 2017
Aging, Articles, Regulation, Savings, ,
Read more...
28May

Pension Reform Options in Chile: Some Tradeoffs

By Marika Santoro (International Monetary Fund) In this paper, we study the macroeconomic impact of pension reform options in Chile, using a dynamic general equilibrium model. The main reform proposal considers raising contributions (employer side) and vehicle additional proceeds to individual accounts and to increase the support of solidarity pensions. We model increased contributions as a labor tax. We find the impact of this reform on GDP to be negative in the near to the medium run, with GDP declining...

May 28, 2017
Adequacy, Articles, Pension design, Regulation, ,
Read more...
25May

Are We Ready to Make Decisions for Our Retirement?

PPI’s Op-Ed By Eduardo Rodriguez Montemayor Rapidly aging populations are forcing policymakers to rethink pensions. Defined contribution schemes are quickly becoming the norm, but people don’t yet seem ready for them. Academic evidence from economics and behavioural finance suggest that under many circumstances people may not be ready to take control of retirement savings investment. This is a challenging finding in a context where traditional defined benefit (DB) schemes, (which typically depend on individual salary history and length of service) are waning...

May 25, 2017
Articles, OP Ed, PPI’s original Op-Eds
Read more...
24May

The Impact of Partisanship in the Era of Retrenchment. Insights from Quantitative Welfare State Research

By Frank Bandau (University of Bamberg) Does government partisanship matter when it comes to the size and generosity of the welfare state? While the answer to this question is clearly positive for the ‘golden age’, there is so far no clear-cut answer with regard to the subsequent era of welfare retrenchment. This is by no means due to a lack of research. Quite to the contrary, a substantial number of macro-quantitative studies published over the past 15 years have addressed...

May 24, 2017
Adequacy, Articles, Regulation,
Read more...