August 2019
09Aug

Crashed: How a Decade of Financial Crises Changed the World

By Adam Tooze In September 2008 the Great Financial Crisis, triggered by the collapse of Lehman brothers, shook the world. A decade later its spectre still haunts us. As the appalling scope and scale of the crash was revealed, the financial institutions that had symbolised the West's triumph since the end of the Cold War, seemed - through greed, malice and incompetence - to be about to bring the entire system to its knees. Crashed is a brilliantly original...

August 9, 2019
Adequacy, Books, Investing, System Sustainability,
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09Aug

On the Optimal Combination of Annuities and Tontines

By An Chen, Manuel Rach, Thorsten Sehner Tontines, retirement products constructed in such a way that the longevity risk is shared in a pool of policyholders, have recently gained vast attention from researchers and practitioners. Typically, these products are cheaper than annuities, but do not provide stable payments to policyholders. This raises the question whether, from the policyholders' viewpoint, the advantages of annuities and tontines can be combined to form a retirement plan which is cheaper than an annuity...

August 9, 2019
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09Aug

Tenure Choice, Portfolio Structure and Long-Term Care – Optimal Risk Management in Retirement

By Hans Fehr, Maurice Hofmann We study the interplay between tenure decisions, stock market investment and the public social security system. Housing equity not only serves a dual purpose as a consumption good and as an asset, but also provides insurance to buffer various risks in retirement. Our life cycle model captures these links in order to explain why homeownership in Germany is so low. Our simulation results indicate that the public long-term care as well as the pension...

August 9, 2019
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July 2019

26Jul

Defined Benefit Pensions and Homeownership in the Post-Great Recession Era

By Tim Murray While housing equity accounts for a large portion of many retiree’s savings portfolios, they are not using their equity to increase consumption in retirement as suggested by the Life-Cycle Hypothesis. Defined benefit plans provide a guaranteed source of income in retirement where the household bears no risk, whereas households with a defined contribution plan are subject to potential risk depending on their asset allocation. This paper examines whether having a defined benefit plan mitigated some of...

July 26, 2019
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26Jul

Retirement Security: Trends in Corporate Restructurings and Implications for Employee Pensions

By Charles A. Jeszeck, David Lehrer, Charles J Ford, Jessica Moscovitch, James Bennett, Lilia Chaidez, Michelle Munn, Jessica Orr, Cady Panetta, Rhiannon Patterson, Rachel Stoiko, Frank Todisco, Weigle Hannah, Adam Wendel Over the past 20 years, corporate restructurings, particularly mergers and acquisitions (M&A) tended to happen more frequently during periods of economic expansion. GAO's analysis found that from 1999 through 2018, M&A activity comprised the largest share of corporate restructurings. In terms of dollar value of completed deals, M&A...

July 26, 2019
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19Jul

Longevity: a new asset class

By David Blake A little over a decade ago, a new asset classemerged, one linked to longe vity risk, i.e., unanticipatedchanges in life expectancy. The Life Market has two seg-ments: a macro-segment with assets linked to groups of lives,such as members of a pension plan or a book of annuitants;and a micro-segment with assets linked to individual lives,such as life settlements. For the market to become global,certain market requirements need to be satisfied, such asunderstanding the causal factors underlying...

July 19, 2019
Articles, Investing, Pension design, Savings,
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Navigating Complex Financial Decisions at Retirement: Evidence from Annuity Choices in Public Sector Pensions

By Robert L. Clark, Robert G. Hammond, David Vanderweide Choices regarding the disposition of wealth at retirement can have substantial implications for retirement income security. We analyze the factors determining annuity option choices offered by a public sector defined pension plan with no default annuity option. Using combined administrative records and survey data, we explore the role of individual and household characteristics as well as risk preferences, time preferences, and financial literacy. The evidence is consistent with predictions over which...

July 19, 2019
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12Jul

The Future of Finance is Now: The Most Important Trends in Finance for the Coming Decade Have Already Started

By Jason Schenker The Future of Finance is Already HereIndustries are being disrupted by new and emerging technologies. The coming decade will bring an acceleration of technological innovation, adoption, and disruption. But finance has long been an industry at the forefront of technology adoption, which is why some of the most critical technological innovations and solutions for finance have already emerged. The Future of Finance is Now explores the most important innovations in finance technology (FinTech) as...

July 12, 2019
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05Jul

Pension Savings: The Real Return

By Ján Šebo, Ştefan Dragoş Voicu, Carsten Andersen, Aleksandra Mączyńska, Didier Davydoff, Lorenzo Marchionni, Marissa Diaz, Michal Mešťan, Lubomir Christoff, Edin Mujagić, Gabaut Laetitia, Grégoire Naacke, Johannes Hagen, Guillaume Prache, Fernando Herrero In June 2013, BETTER FINANCE published a research report entitled “Private Pensions: The Real Return” which evaluated the return of private pension products after charges, after inflation (“real” returns) and – where possible – after taxation. This first report furthermore identified the factors affecting these returns in...

July 5, 2019
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June 2019

28Jun

Switching Costs and Competition in Retirement Investment

By Fernando Luco How do different switching costs affect choices and competition in a private pension system? I answer this question in a setting in which variation in employment status allows me to identify two switching costs that jointly affect enrollees’ decisions: the cost of evaluating financial information and the cost of the bureaucratic process that enrollees must navigate when switching. I use this variation to estimate the different switching costs and study their impact on competition among pension...

June 28, 2019
Adequacy, Articles, Investing, System Sustainability,
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