Articles Archives - Page 129 of 140 - Pension Policy International

04FebFebruary 4, 2017

The Effect of Non-contributory Pensions on Saving in Mexico

By IADB This paper examines the effects of non-contributory pension programs at the federal and state levels on Mexican households’ saving patterns using micro data from the Mexican Income and Expenditure Survey. The federal program by itself appears to reduce the saving rate of households whose oldest member is either 18 to 54 or 65 to 69. State programs by themselves have no significant effects on household saving rates in the smallest localities, but in larger localities they may reduce...

February 4, 2017

Adequacy, Articles, Pension designMandatory pensions, Occupational Pensions, Savings, Voluntary pensions

04FebFebruary 4, 2017

Non-Contributory Pensions and Savings: Evidence from Argentina

By Martín González-Rozada & Hernán Ruffo This paper examines the effects of Argentina’s Plan de Inclusión Previsional (PIP), which changed the pension system in a way that generated a new noncontributory pillar, produced a huge expansion in pension coverage between 2005 and 2008 and a transfer of a vast amount of resources to households. Using a difference in differences methodology it is found that the PIP policy has reduced the incentives to work and to be in the labor force...

February 4, 2017

Adequacy, Articles, Pension designMandatory pensions, Occupational Pensions, Savings, Voluntary pensions

04FebFebruary 4, 2017

Why Do Firms Offer Risky Defined Benefit Pension Plans?

By David A. Love, Paul A. Smith, & David Wilcox Even risky pension sponsors could offer essentially riskless pension promises by contributing a sufficient level of resources to their pension trust funds and by investing those resources in fixed-income securities designed to deliver their payoffs just as pension obligations are coming due. However, almost no firm has chosen to fund its plan in this manner. We study the optimal funding choice for plan sponsors by developing a simple model of...

February 4, 2017

Articles, Corporate Governance, InvestingInvestment, Risk

04FebFebruary 4, 2017

Should Risky Firms Offer Risk-Free DB Pensions?

By David A. Love, Paul A. Smith, & David Wilcox We develop a simple model of pension financing to study the effects of pension risk on shareholder value. In the model, firms minimize costs, total compensation must clear the labor market, and a government pension insurer guarantees a portion of promised benefits. We find that in the absence of mispriced pension insurance, the optimal pension strategy under most specifications is to immunize all sources of market risk. Mispriced pension insurance,...

February 4, 2017

Articles, Corporate Governance, InvestingInvestment, Risk

04FebFebruary 4, 2017

Do Pension Plans with Participant Investment Choice Teach Households to Hold More Equity?

By Scott Weisbenner Some retirement plans allow the participant to choose how funds are invested. Having to direct investments may provide the participant with financial education. This paper finds that households covered by pension plans in which the employee chooses investments are significantly more apt to hold stock outside of their retirement plan than are households with pension plans offering no such choice. The effect of investment choice upon non-pension asset allocation cannot be explained by portfolio rebalancing or differences...

February 4, 2017

Articles, Investing, Labor Market, SavingsFinancial Education, Investment

04FebFebruary 4, 2017

Footnotes Arent Enough: The Impact of Pension Accounting on Stock Values

By Julia Coronado, Olivia S. Mitchell, Steven A. Sharpe & S. Blake Nesbitt Some research has suggested that companies with defined benefit (DB) pensions are sometimes significantly misvalued by the market. This is because the measures of pension cost and pension net liabilities embedded in financial statements, taken at face value, can provide a very misleading picture of pension finances. The more pertinent information on pension finances is relegated to footnotes, but this might not receive much attention from portfolio...

February 4, 2017

Articles, InvestingFinancial Education

04FebFebruary 4, 2017

Workers' Knowledge of their Pension Coverage: A Reevaluation

By Martha Starr-McCluer & Annika Sundén Because employer-provided pensions represent an important source of income during retirement, accurate information on pension coverage would seem to be crucial for making sound decisions on retirement timing, saving and portfolio allocation. However, previous research suggests that workers’ knowledge of their pension provisions is often incomplete or incorrect. This paper re-examines workers’ knowledge of their pension coverage, using matched employer-employee data from the Federal Reserve Board’s Survey of Consumer Finances. We find that, while...

February 4, 2017

Aging, Articles, Labor MarketCoverage, Financial Education

04FebFebruary 4, 2017

Workers’ Knowledge of their Pension Coverage: A Reevaluation

By Martha Starr-McCluer & Annika Sundén Because employer-provided pensions represent an important source of income during retirement, accurate information on pension coverage would seem to be crucial for making sound decisions on retirement timing, saving and portfolio allocation. However, previous research suggests that workers’ knowledge of their pension provisions is often incomplete or incorrect. This paper re-examines workers’ knowledge of their pension coverage, using matched employer-employee data from the Federal Reserve Board’s Survey of Consumer Finances. We find that, while...

February 4, 2017

Aging, Articles, Labor MarketCoverage, Financial Education

04FebFebruary 4, 2017

Cash Balance Pension Plan Conversions and the New Economy

By Julia Coronado & Phillip Copeland Many firms that sponsor traditional defined benefit pensions have converted their plans to cash balance plans in the last ten years. Cash balance plans combine features of defined benefit (DB) and defined contribution (DC) plans, and yet their introduction has proven considerably more controversial than has the increasing popularity of DC plans. The goal of this study is to estimate a hierarchy of the influences on the decision of a firm to convert its...

February 4, 2017

Articles, Investing, Pension designPolitical economy, Regulation

04FebFebruary 4, 2017

Did Pension Plan Accounting Contribute to a Stock Market Bubble?

By Julia Coronado & Steven Sharpe During the 1990s, the asset portfolios of defined benefit (DB) pension plans ballooned with the booming stock market. Due to current accounting guidelines, the robust growth in pension assets resulted in a stealthy but substantial boost to the profits of sponsoring corporations. This study assesses the extent to which equity investors were fooled by pension accounting. First, we test whether stock prices reflected the fair market value of sponsoring firms’ net pension assets reported...

February 4, 2017

Articles, Corporate Governance, Investing, RegulationInvestment

February 2017