February 2022
11Feb

Reforming the Greek Pension System

By Daehaeng Kim, Alvar Kangur & Niki Kalavrezou The Greek pension system has been costly, complex, and distortive, which has contributed to Greece’s fiscal problems and discouraged labor force participation. Several attempts to reform the system faltered due to lack of implementation, pushback by vested interests, and court rulings leading to reversals. A series of reforms introduced throughout 2015–17 unified benefit and contribution rules, removed several distortions and reduced fragmentation and costs. If fully implemented throughout the long-term, these reforms...

February 11, 2022
Articles, Pension design, System Sustainability, ,
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03Feb

Do pensions have real teeth? Evidence from the state government borrowing costs

By Sumit Agarwal, Chunlin Liu, Qiyuan Peng, Qun Wu & Ting Zhang Yes, they do. State governments with risky defined benefit pension plans have higher borrowing costs, as measured by larger bond offering yield spreads. To control for the potential endogenous issue, we utilize the instruments of actuarial firms’ reputation, and direct flight between the state capital and actuarial firm headquarter. We further identify the relation between pension plan investment risks and borrowing costs using two quasi-experimental shocks: the introduction...

February 3, 2022
Articles, System Sustainability, , , ,
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03Feb

Target Date Funds and Portfolio Choice in 401(k) Plans

By Olivia S. Mitchell & Stephen P. Utkus Target date funds in corporate retirement plans grew from $5B in 2000 to $734B in 2018, partly because federal regulation sanctioned these as default investments in automatic enrollment plans. We show that adopters delegated pension investment decisions to fund managers selected by plan sponsors. Including these funds in retirement saving menus raised equity shares, boosted bond exposures, curtailed cash/company stock holdings, and reduced idiosyncratic risk. The adoption of low-cost target date funds...

February 3, 2022
Articles, Pension design, , ,
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January 2022
28Jan

Managing Misbehavior: Rational Choice in an Uncertain Retirement

By Rene Martel, Jennifer Gongola, sean klein, Avi Sharon Behavioral science has helped encourage better behaviors for many investors who are accumulating savings for retirement. This paper investigates the application of behavioral science to decumulation to help investors make better choices and maintain quality of life in retirement. We conducted a proprietary research study, collecting more than 750 responses from affluent and high-net-worth investors in the United States age 55 and older. The results identify key behavioral influences linked to...

January 28, 2022
Articles, Payout, Savings, , ,
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28Jan

Financial Attitude and Pension Savings Among Informal Economy Workers in Ghana: Application of the Theory of Planned Behaviour

By Dominic Buer Boyetey, Francis Enu-Kwesi The Theory of Planned Behaviour (TPB) was applied to examine the financial attitude of informal economy workers in pension saving. This was against the background that informal economy workers were left out of formal pension schemes while micro pension schemes (MPS) remain as options that can guarantee economic security after retirement for people with the right financial attitudes. We used interview schedules and interview guides to collect quantitative and qualitative responses concurrently on key...

January 28, 2022
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21Jan

Is Demand for Older Workers Adjusting to an Aging Labor Force?

By Damir Cosic & C. Eugene Steuerle This paper analyzes the demand for older workers, their substitutability with younger workers, and how well the demand for older workers tracks changes in the age composition of the labor force. The main data source for the analysis is the Quarterly Workforce Indicators from 2000 to 2018, which provides earnings and employment by sector and metropolitan statistical area. The analysis also uses KLEMS national data to estimate the sector-specific price and quantity of...

January 21, 2022
Aging, Articles, ,
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21Jan

In a Highly Indebted Economy: Security Issues for the Asset-based China’s Reform and the Financial System

By Tianyong Zhou Since the start of the 21st century, all major global economies have been experiencing a shift to a model of low consumption, low interest rate, low inflation, low growth and high debt. China is no exception. This article argues that in the high-indebtedness economic model, the proportion of committed and guaranteed debt service credit is decreasing, while the proportion of asset-backed credit corresponding to debt is on the rise; and with respect to currency stability, the role...

January 21, 2022
Articles, System Sustainability, ,
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21Jan

The Effects of Credible Voluntary Disclosures: Institutional Investor Engagement and Investees’ ESG Performances

By Massimiliano Bonacchi, April Klein, Sara Longo & Giovanni Strampelli We study the effectiveness of institutional investor engagement on the ESG performance of a sample of UK firms listed in the FTSE 350 Index. To measure the quality of engagement, we exploit the introduction of the tiering classification system by the Financial Reporting Council (FRC) in 2016 for signatories’ reporting under the UK Stewardship Code. Using an entropy matched difference-in-differences research design, we show that the introduction of the tiering...

January 21, 2022
Articles, Investment,
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14Jan

Development an optimization plan for redistributing pension assets applying information technologies

By Svitlana Achkasova & Yevheniia Malyshko The issue of the significance of the role of information technologies in the pension system was highlighted. The information and communication model of the state regulation of financial support of the pension system in the market of non-banking financial services was considered. The essence of information and communication support of the risk-oriented approach to the system of accumulative pension provision, which involves preventing the information and technological probability of risks, was explored. The issues...

January 14, 2022
Articles, Pension Management, ,
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14Jan

Lean Advice for New Investors

By Jarrod Wilcox, Zvi Bodie, & Dan di Bartolomeo As defined benefit pensions have been replaced by investor-directed defined contribution plans, implementing sound investment policies for retail investors of modest means has become a problem of increasing urgency. This group comprises most of the investor population across all countries. In the U.S. it is characterized by inadequate saving, failure to take advantage of materially higher payout for delayed Social Security benefits, extensive credit card debt, and pursuit of naïve investment...

January 14, 2022
Articles, Investment, ,
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