December 2024
06Dec

Retirement Incentives and Decisions across the Income Distribution: Evidence in Canada

By Kevin S. Milligan & Tammy Schirle We evaluate the retirement incentives embedded in Canada’s retirement income system with attention to where individuals are located in the income distribution. We find that larger social security benefits are available to individuals with lower earnings in their work history because of the benefit income tests, but those from the top of the income distribution tend to enjoy longer lives over which they may receive benefits. Overall, we see greater Social Security Wealth...

December 6, 2024
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04Dec

OECD Pensions Outlook 2024: Improving Asset-backed Pensions for Better Retirement Outcomes and More Resilient Pension Systems

By Organisation for Economic Co-operation and Development Over the past two decades, asset-backed pensions have become a key pillar of retirement systems, with assets more than tripling to over USD 56 trillion in 2023. These pensions diversify resources for financing retirement and complement pay-as-you-go systems, enhancing resilience to economic shocks and demographic challenges. Their robust design, regulation, and supervision are important for delivering strong retirement outcomes. The 2024 OECD Pensions Outlook provides a valuable resource for policymakers, regulators, and stakeholders, providing comprehensive analysis...

December 4, 2024
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November 2024
29Nov

Megatrends and the Future of Social Protection

By Organisation for Economic Co-operation and Development Ageing populations, changing labour markets, and climate change are affecting economies and societies across OECD countries. What challenges do these “megatrends” pose for social protection systems? What are the implications of these trends for the coverage, the effectiveness, and – critically – the funding of social protection today and tomorrow? With an eye towards informing future reforms, this report presents a broad stocktaking of population ageing, changing patterns of labour supply, new and emerging...

November 29, 2024
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29Nov

Financial Inclusion and the Informal Sector

By Noha Emara, Freddy Cama & Mohamed Trabelsi This paper explores the relationship between the informal sector and financial inclusion for a sample of 186 countries across the period 2004-2018 and using various methods of estimations—ordinary least squares, instrumental variables, fixed effects, and general method of moments. The results show financial inclusion significantly reduces the size of the shadow economy with all indicators of access and usage of financial services. The result is also robust when considering the income level,...

November 29, 2024
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29Nov

Pension Liquidity Risk

By Kristy Jansen, Sven Klingler, Angelo Ranaldo & Patty Duijm Pension funds rely on interest rate swaps to hedge the interest rate risk arising from their liabilities. Analyzing unique data on Dutch pension funds, we show that this hedging behavior exposes pension funds to liquidity risk due to margin calls, which can be as large as 15% of their total assets. Our analysis uncovers three key findings: (i) pension funds with tighter regulatory constraints use swaps more aggressively; (ii) in...

November 29, 2024
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15Nov

Pension’s Resource-Time Trade-Off: The Role of Inequalities in the Design of Retirement Schemes

By Renaud Bourlès & Santiago Lopez-Cantor Public pension schemes serve as mechanisms for inter-temporal income smoothing and within-cohort redistribution. This paper examines the influence of income and lifespan inequalities on the structure of a democratically chosen pension scheme. We use a probabilistic voting model where agents vote on the size and the degree of redistribution (i.e. the Beveridgean factor) of pension and can supplement it with voluntary contributions. Our analysis reveals that when all agents can supplement the public scheme...

November 15, 2024
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October 2024
11Oct

Rules of Thumb and Retirement Accounts

By Vanya Horneff, David A. Love & Raimond Maurer We examine the welfare costs of applying common rules of thumb for saving, investment, 401k contributions, and withdrawals in an environment that includes a realistic treatment of taxation, Social Security benefits, 401k-plan details, and uncertainty in income, longevity, and asset returns. We test the performance of commonly recommended rules, such as investing 100-minus-age percent of assets in stocks, contributing 6–10% of income to a 401k account, or withdrawing the required minimum...

October 11, 2024
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04Oct

Reverse Mortgages, Financial Inclusion, and Economic Development: Potential Benefit and Risks

By Peter Knaack, Margaret Miller & Fiona Stewart This paper examines the state of reverse mortgage markets in selected countries around the world and considers the potential benefits and risks of these products from a financial inclusion and economic benefit standpoint. Despite potentially increasing demand from aging societies—combined with limited pension income—a series of market failures constrain supply and demand. The paper discusses a series of market failures on the supply side, such as adverse selection, moral hazard, and the costly...

October 4, 2024
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September 2024
20Sep

Optimising Bangladesh’s Universal Pension Framework: From Lessons to Actions

By Samiha Chowdhury Social protection for the elderly, in the form of the Old-age Allowance (OAA) Programme, has been operational in Bangladesh since 1998, offering monthly financial support to senior citizens from poor and vulnerable households. As of FY24, the programme has approximately 5.8 million elderly people as beneficiaries, each receiving Tk.600 per month distributed on a quarterly basis. Apart from this, retirement benefits for the government employees and their families can also be considered a social protection programme for...

September 20, 2024
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13Sep

Care-Dependent Target Benefit Pension Plan with Minimum Liability Gap

By Ruotian Ti, Ximin Rong, Cheng Tao & Hui Zhao With the progressive aging of populations, the significance of long-term care (LTC) services in aging societies is growing. In this paper, we integrate LTC services with pensions, studying a stochastic model for a care-dependent target benefit pension (TBP) plan. The plan members' target benefit rates are set according to the care cost for three different health states, i.e., healthy, mildly disabled and severely disabled states. And the pension contributions reflect...

September 13, 2024
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