June 2023
09Jun

The Effect of Defined Benefit Pensions on Income Survivability and ‘Safe’ Withdrawal Rates in Retirement

By Alan Stocker  Income from a Defined Benefit (DB) pension with various levels of inflation protection (no protection, and inflation caps of 2.5% and 5%) was combined with the income from an investment portfolio to provide a total required income, IR that was constant in inflation adjusted terms. Results of backtesting are presented for retirees in the UK and USA using historical asset returns and inflation. For a value of IR close to the maximum safe withdrawal rate (MSWR) for...

June 9, 2023
Articles, Pension design, , ,
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09Jun

Pension Systems (Un)Sustainability and Fiscal Constraints: A Comparative Analysis

By Burkhard Heer, Vito Polito & Michael Wickens  Using an overlapping generations model, two new indicators of public pension system sustainability are proposed: the pension space, which measures the capacity to pay for pension expenditures out of labour taxation, and the pension space exhaustion probability reflecting demographic uncertainties. These measures reveal that the pension spaces of advanced economies are strikingly different. Most nations have little scope to further finance pensions out of labour income taxation over the next thirty years....

June 9, 2023
Articles, Sustainability, , ,
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May 2023
26May

Pension Reform: Conceptual Foundations and Practical Challenges

By Seamus Duffy & Oliver Giesecke Underfunded pension are the largest liability for state and local governments across the United States. As a result of increasing recognition of the associated risks, recent statutory funding mandates led to a sharp increases in required contributions, threatening city services and employee bases. As funding pressure mounts, pension reforms offer a viable tool for prudent economic policy. We propose five general principles that guide pension reform considerations and discuss how these principle stand in...

May 26, 2023
Articles, System Sustainability, , , ,
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26May

‘Earned, Not Given’? The Effect of Lowering the Full Retirement Age on Retirement Decisions

By Mathias Dolls & Carla Krolage This paper analyzes behavioral responses to a 2014 reform in the German public pension system that lowered the full retirement age (FRA) of individuals with a long contribution history by up to two years and framed the new FRA as reference age for retirement. Using administrative data from public pension insurance accounts, we first document a substantial bunching response at the FRA exceeding the control group’s bunching by 83%. Second, we show in a...

May 26, 2023
Articles, System Sustainability, , ,
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26May

Save to Advance: Analysis and Recommendations on the Pension Reform in Colombia

By Manuela Restrepo, Camilo José Ríos, Andrés Mauricio Velasco & Andrés Zambrano  In March of 2023, the Government filed a Bill that seeks to modify the Colombian pension system. The Bill contemplates a four-pillar scheme: a social transfer pillar named Solidario, a semi- contributory pillar, a contributory pillar, and a voluntary savings pillar. This paper presents a summary of the Bill filled in Congress, followed by an analysis of its implications for fiscal sustainability and macroeconomic stability. As a result, we recommend that the...

May 26, 2023
Articles, Pension design, , , ,
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19May

Access to Pensions, Old-Age Support, and Child Investment in the People’s Republic of China

By Xiaoyue Shan & Albert Park This paper studies how access to public pensions affects old-age support and child investment in traditional societies. Guided by predictions from an overlapping generations model, we analyze the influences of a new pension program in rural People’s Republic of China, using a difference-in-differences approach. We find that the program crowds out transfers from working-age adults, especially men, to their elderly parents. Interestingly, the impact on child investment significantly differs by child gender. While adult...

May 19, 2023
Articles, System Characterization, , , ,
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19May

Can the Australian Judicial System Meet the Structural Challenges of Future Population Change?

By Brian Opeskin  This article examines the impact of population change on the evolution of the Australian judicial system. Through four case studies, it argues that demography is an important but overlooked lens through which to understand pressures on the judicial system over coming decades. The case studies examine the impact of increasing life expectancy on judicial tenure; of population ageing on judicial pensions; of international migration on judicial diversity; and of population redistribution on the spatial delivery of justice...

May 19, 2023
Aging, Articles, , ,
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19May

But What If a Pension Fund is Overfunded?

By James Tatum Currently, the consensus is that if a pension fund is less than 100 percent funded, it is underfunded.1 In other words, if the pension fund does not presently have all the assets needed to pay liabilities in the future (and without consideration of future contributions to the pension fund), the pension fund and retiree benefits are theoretically imperiled. So, out of concern for “underfunded” pension funds, of which there are many, there have been innumerable research papers,...

May 19, 2023
Articles, Pension Management, ,
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12May

Retirement Plan Reforms in the Absence of a Retirement Policy

By Natalya Shnitser The US retirement system is currently characterized by tremendous diversity of instruments, institutions, and intermediaries in pursuit of the same goal. While the goal – achieving financial security in retirement – is widely accepted by policymakers and participants, for individuals in the United States, the nature of the “investment” experience in the retirement context varies considerably based on the identity, savviness, and size of the intermediaries, as well as the particular legal regime to which such intermediaries...

May 12, 2023
Articles, Pension design, , ,
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12May

Social Security of Labour in India

By Ishita Arora The social security of labour in India is a critical issue that needs to be addressed. The country's labour force is massive, and ensuring their protection and well-being is crucial to their quality of life and the country's economic development. This research paper aims to explore the current state of social security for workers in India, including policies and programs aimed at providing protection and support to individuals and families against social and economic risks such as...

May 12, 2023
Articles, Labor Market, , ,
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