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October 2022

21Oct

Older Workers’ Employment and Social Security Spillovers through the Second Year of the COVID-19 Pandemic

By Gopi Shah Goda, Emilie Jackson, Lauren Hersch Nicholas & Sarah Stith The COVID-19 pandemic triggered a large and immediate drop in employment among US workers, along with major expansions of unemployment insurance and work from home. We use Current Population Survey and Social Security application data to study employment among older adults and their participation in disability and retirement insurance programs through the second year of the pandemic. We find ongoing improvements in employment outcomes among older workers in...

October 21, 2022
Aging, Articles, Labor Market, , ,
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21Oct

The politics and economics of pension privatization in latin america

By Raúl Madrir This research note seeks to explain 'lvhya large nUl11ber of Latin Atnerican countries have privatized their pension systel11s in recent years. It argues that the privatization schelnes are a response to the severe capital shortages that have plagued their countries intennittently in recent years rather than to the financial problelns facing son1e of the pension systelns. The likelihood of pension privatization, 1 argue, is determined in large part by the vulnerability of countries to capital shortages as...

October 21, 2022
Articles, System Characterization, , , ,
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14Oct

Bounded Rationality and Optimal Retirement Age

By Hyeon Park This paper explores a lifecycle model of labor supply and endogenous retirement behavior for households whose planning window is truncated and who will reoptimize as extra information on productivity is revealed over time. This short horizon model internalizes the restriction on rationality for temporal resource allocation and the labor supply is closely dependent on the degree of productivity changes in view. With the model, the endogenous retirement timing---the moment at which the marginal utility from the intended...

October 14, 2022
Articles, Labor Market, , ,
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14Oct

Herd Behaviour of Pension Funds by Asset Class

By Jacob Antoon Bikker & Ian Koetsier This study investigates asset herd behaviour for Dutch pension funds from 1999 to 2014 using quarterly data. We find herd behaviour for investments in twenty asset classes including non-traditional asset classes, and to both purchasing and selling. Pension funds’ herd behaviour is particularly high in alternative investments, which might increase herding in general, as pension funds move their portfolio towards these assets in recent years. Herding intensity is higher during stock market crises,...

October 14, 2022
Articles, Pension Management, , ,
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14Oct

Liability Driven Investment and Asset Allocation inspired by JPM LTCMA

By Eddy H. Verbiest A white-box deterministic system simulates long-term LDI cashflows using as input J.P.Morgan Long Term Capital Market Assumptions adapted to make them interest rate dependent. Trading, coupons and dividends provide cashflows to pay liabilities and extract excess cash to stakeholders while maintaining the allocation weights and target lifes. Performance is measured by FixPct: the annually extractable Fixed Percentage of remaining liabilities to run-off to zero. This measure summarizes the interplay of drivers over many decades and allows...

October 14, 2022
Articles, Investment, Pension Management, ,
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07Oct

Investors’ Activity in Response to Information About Their Pensions

By Amedeus Malisa This paper uses individual-level data on fund choices in the Swedish Premium Pension to analyze how investors respond to information about their pension savings. The Swedish Pensions Agency mails an annual information letter, the Orange Envelope, to investors to provide them with tailored information about their public pension accounts. This paper examines the effect of pension communication in the Swedish Premium Pension System (PPS) by exploiting the staggered roll-out of these letters across different Swedish counties. Results...

October 7, 2022
Articles, Savings, , ,
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06Oct

The Effect of Removing Early Retirement on Mortality

By Cristina Bellés-Obrero, Sergi Jimenez-Martin & Han Ye This paper sheds new light on the mortality effect of delaying retirement by investigating the impacts of the 1967 Spanish pension reform. This reform exogenously changed the early retirement age, depending on the date individuals started contributing to the Social Security system. Those contributing before 1 January 1967 maintained the right to voluntarily retire early (at age 60), while individuals who started contributing after that date could not voluntarily claim a pension...

October 6, 2022
Articles, Pension design, Retirement Age, , ,
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06Oct

Pension funds in sub-Saharan Africa

By Owen Nyang`oro & Githinji Njenga The population structure the world over is going through a demographic shift, and the elderly proportion is projected to increase with population growth. This change is a matter of concern for sub-Saharan African (SSA) countries, where the majority of the people are young and the rates of both population growth and unemployment are high. A good pension system provides elderly assistance and is a source of savings for long-term investment. The pension systems in...

October 6, 2022
Articles, Pension Management, Savings, , ,
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September 2022

30Sep

Nudges and Networks: How to Use Behavioural Economics to Improve the Life Cycle Savings-Consumption Balance

By David Blake Many people find it difficult to start and maintain a retirement savings plan. We show how nudges can be used both to encourage people to save enough to provide an acceptable standard of living in retirement and to draw down their accumulated pension fund to maximize retirement spending, without the risk of either running out of money or leaving unintended bequests. Networks can help too, particularly employer-based networks. However, the nudges and networks are more likely to...

September 30, 2022
Articles, Savings, ,
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30Sep

The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets

By Aizhan Anarkulova, Scott Cederburg, Michael S. O'Doherty & Richard W. Sias We use a comprehensive new dataset of asset-class returns in 38 developed countries to examine a popular class of retirement spending rules that prescribe annual withdrawals as a constant percentage of the retirement account balance. A 65-year-old couple willing to bear a 5% chance of financial ruin can withdraw just 2.26% per year, a rate materially lower than conventional advice (e.g., the 4% rule). Our estimates of failure...

September 30, 2022
Articles, Pension design, ,
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