February 2017

04Feb

Assessing the Distortions of Mandatory Pensions on Labor Supply Decisions and Human Capital Accumulation: How to Bridge the Gap between Economic Theory and Policy Analysis

By Mukul Rutkowski, David A. Robalino & Andras Bodor Mandatory pension systems play a major role in individual savings and labor supply decisions. In particular, it is well known that defined benefit pension schemes, which are not actuarially fair, can create incentives for early retirement and therefore reduce labor supply and the stock of human capital in a given country. This is an important policy issue in middle-income countries, with still low participation rates in the labor force, where the...

February 4, 2017
Adequacy, Articles, Labor Market, ,
Read more...
04Feb

Retirement Security: Better Information on Income Replacement Rates Needed to Help Workers Plan for Retirement

By Charles Jeszeck, Kimberley Granger, Jennifer Gregory, Melinda Bowman & Amrita Sen What GAO Found: Household spending patterns varied by age, with mid-career households (those aged 45-49) spending more than older households. For example, according to 2013 survey data from the Bureau of Labor Statistics (BLS), mid-career households spent an estimated average of around $58,500, while young retiree households (those aged 65-69) spent about 20 percent less. While the share of spending was consistent for some categories, other categories had...

February 4, 2017
Adequacy, Articles, Labor Market, ,
Read more...
04Feb

Are ‘Voluntary’ Self-Employed Better Prepared for Retirement than ‘Forced’ Self-Employed? The Case of the Netherlands and Germany

By Douglas Hershey, Hendrik van Dalen, Weiteke Conen & Kene Henkens When it comes to financial preparation for retirement, self-employed workers in many European countries face unique challenges not encountered by traditional wage earners. This is particularly true for self-employed workers who do not supervise subordinate personnel. This is the case because many self-employed individuals in nations such as the Netherlands and Germany do not have large-scale access to employer-sponsored pensions, which are a mainstay of pension support for most...

February 4, 2017
Adequacy, Articles, Labor Market, Pension design,
Read more...
04Feb

Adequacy, Fairness and Sustainability of Pay-as-You-Go-Pension-Systems: Defined Benefit Versus Defined Contribution

By Jennifer Alonso-García, María el Carmen Boado-Penas & Pierre Devolder There are three main challenges facing public pension systems. First, pension systems need to provide an adequate income for pensioners in the retirement phase. Second, participants wish a fair level of benefits in relation to the contributions paid. Last but no least, the pension system would need to be financially sustainable in the long run. In this paper, we analyse defined benefit versus defined contribution schemes in terms of adequacy,...

February 4, 2017
Adequacy, Articles, System Sustainability,
Read more...
04Feb

Default Investment Strategies in a Defined Contribution Pension System: A Pension Risk Model Application for the Chilean Case

By Félix Villatoro, Solange Berstein & Olga Fuentes In a defined contribution pension system, one of the main risks faced by members refers to the investment of funds. In this context, we discuss which is the most suitable risk measurement for the affiliates to the pension system. Different life-cycle investment strategies are evaluated under this measure for different types of workers. We point out the importance of designing well-suited default investment options in light of the economic behavior of members,...

February 4, 2017
Articles, Regulation, Supervision,
Read more...
04Feb

Governance and Performance Measurement of Pension Supervisory Authorities

By Fiona Stewart, John Ashcroft & Nina Paklina The governance, oversight and performance measurement of financial supervisory authorities are increasingly recognized as important topics – not least due to the recent financial crisis and perceived problems in (and lack of) the regulatory oversight of financial institutions. Yet this is a relatively under-researched area, particularly in relation to pension supervision. This paper therefore attempts to combine theoretical material from a range of financial sectors along with practical examples from the pensions...

February 4, 2017
Articles, Corporate Governance, Regulation, Supervision,
Read more...
04Feb

Managing and Supervising Risks in Defined Contribution Pension Systems

By Fiona Stewart & John Ashcroft Defined contribution (DC) plans are playing a larger role in pension systems around the world. Pension supervisory authorities are consequently asking if their oversight approaches need to adapt to this development – given that the risks within DC systems are born by the plan members themselves? This paper highlights the key challenges for DC supervisors, outlining the different mechanisms which can be used to control risks within DC systems, and how the use of these...

February 4, 2017
Articles, Regulation, Supervision,
Read more...
04Feb

Consumer Confusion: The Choice of Afore in Mexico

By Roberto Calderón-Colín, Enrique E. Dominguez & Moises J. Schwartz This paper was prepared for the World Bank 4th Annual Contractual Savings Conference (Washington DC, April 2008) co-organized by Gregorio Impavido. The article shows that account transfers among pension administrators in Mexico barely respond to price or return considerations and in general has not improved the consumer's pension balance. Instead of strengthening competition through lower fees and higher returns for the consumer, AFORE switching has so far undermined the system...

February 4, 2017
Articles, Labor Market, Regulation, Supervision, , ,
Read more...
04Feb

Older Peoples’ Willingness to Delay Social Security Claiming

By Raimond Maurer & Olivia S. Mitchell We have designed and fielded an experimental module in the 2014 HRS which seeks to measure older persons’ willingness to voluntarily defer claiming of Social Security benefits. In addition, we evaluate the stated willingness of older individuals to work longer, depending on the Social Security incentives offered to delay claiming their benefits. Our project extends previous work by analyzing the results from our HRS module and comparing findings from other data sources which...

February 4, 2017
Aging, Articles, Labor Market
Read more...
04Feb

Pension Risk and Risk-Based Supervision in Defined Contribution Pension Funds

By Tony Randle & Heinz P. Rudolph Defined contribution pension systems have faced criticism in the wake of the financial and economic crisis for not delivering adequate and sustainable pension incomes at retirement. Much of the problem has centered around the misalignment of pension fund management companies and the interests of pension fund members, with the focus on short-term volatility rather than delivering adequate pension income over the long term. Although pension fund supervisors in emerging economies have attempted to...

February 4, 2017
Articles, Regulation, Supervision,
Read more...