June 2020
05Jun

An Introduction to Pensionomics

By Mario Arturo Ruiz Estrada, Evangelos Koutronas Purpose – The purpose of this paper is to explore the concept of pensionomics as a prospective tool for pension evaluation. This paper suggests a paradigm shift – a multi-disciplinary synthesis of differing perspectives in evaluating pension’s overall performance based on past work on pension evaluation – incorporating non-economic variables with significant impact on economic growth and social development. Design/methodology/approach – This paper suggests a new analytical tool called “Pensions Consistency (PC)...

June 5, 2020
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05Jun

Can Low Retirement Savings Be Rationalized?

By John B. Shoven, Sita Slavov, John G. Watson Simple presentations of the life cycle model often suggest a constant level of real consumption in retirement. Similarly, financial planners commonly suggest that people save for retirement in such a way as to enable them to maintain a level retirement standard of living equal to their standard of living while working. However, constant consumption with age is only optimal under the precise and unlikely condition that the subjective rate of...

June 5, 2020
Articles, Pension design, Savings, ,
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May 2020
29May

Pension Finance

By M Barton Waring, Robert C Merton Pension plans around the world are in a state of crisis. U.S. plans alone are facing a total accrued liability funding deficit of almost $4 trillion (of the same order of magnitude as the federal debt), a potential financial catastrophe that ranks among the largest ever seen. It has become clear that many government, corporate, and multi-employer pension sponsors will not be able to cope with this crippling debt and may default...

May 29, 2020
Books, Pension design, System Sustainability, ,
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29May

Allianz pension report 2020 the silver swan

By Allianz Even before the Covid-19 outbreak, societies were becoming more and more fragmented over several social fault lines: culture, education, wealth, place of residence. Many of these overlap: The cosmopolitan, well-educated, wealthy people live in (big) cities, whereas more conservative, low-skilled workers tend to live in the periphery. There is, however, one important social fault line that cuts through all these identities: the generation gap. With demographic and climate change (and now the coronavirus pandemic), the generational...

May 29, 2020
Books, Pension design, Reports, System Sustainability, , , , , , , , ,
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29May

The Effect of Workplace Pensions on Household Saving: Evidence from a Natural Experiment in Taiwan

By Tzu‐Ting Yang Population aging causes financial imbalances in pay‐as‐you‐go public pension programs. To remedy this problem, while ensuring the adequacy of retirement savings for employees, many countries complement or substitute public pensions by regulating their workplace pensions. This article exploits a pension reform in Taiwan that has mandated, since 2005, that all private‐sector employers contribute at least 6 percent of an employee's monthly wage to an individual pension account. I use workers in the unaffected sectors as a...

May 29, 2020
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15May

Selfies can help Brazil create a super supplementary pension

By Arun Muralidhar, Robert C. Merton, Alexandre Vitorino Brazilian policy makers and researchers have discussed the introduction of a complementary pension system to complement the Regime Geral de Previdência Social (RGPS), specially for those that want a retirement income above the RGPS ceiling. This article first recommends that the complementary system must be SUPER (Simple, Universal, Portable, Efficient with low cost and Robust Regulatation). It then proposes the adoption of a financial innovation called SeLFIES (Standard-of-Living, Forward-starting, Income-only Securities),...

May 15, 2020
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08May

Pareto-improving transition to fully funded pensions under myopia

By Torben M. Andersen, Joydeep Bhattacharya, joydeep Bhattachary, Marias H. Gestsson Under dynamic efficiency, a pay-as-you-go (PAYG) pension scheme is often described as an “original sin”: It helps the current generation of retirees but hurts future generations because they are forced to save via a return-dominated scheme. Abandoning it is deemed welfare-improving but typically not for all generations. But what if agents are present-biased (hence, undersave for retirement) and the “paternalistically motivated forced savings” component of a PAYG scheme...

May 8, 2020
Articles, Pension design,
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08May

Reference-Dependent Preferences, Time Inconsistency, and Unfunded Pensions

By Torben M. Andersen In the real world, public pay-as-you-go pension (PAYG) schemes are popular and co-exist with private, retirement-saving schemes. This is true even in dynamically efficient economies where such pensions offer a lower return. The classic Aaron-Samuelson result argues that, in theory, this is impossible. Later work has shown that it may be possible if agents, left on their own, undersave due to myopia or time-inconsistency. In that case, if the government is paternalistic, a welfare rationale...

May 8, 2020
Articles, Pension design, System Sustainability,
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01May

Clearing the Bench: Using Mandatory Retirement to Promote Gender Parity in the U.S. and the EU Judiciaries

By Christine Chambers Goodman Many European Union (“EU”) countries have been particularly adept at implementing antidiscrimination laws that go beyond merely promoting gender diversity, but also toward obtaining gender parity in some areas. These laws, directives, and policies, along with other factors, have expanded the representation of women in the legal profession generally and specifically in the ranks of professional judge positions, such that women constitute a majority, however slight, of judges throughout the EU. On a parallel track,...

May 1, 2020
Articles, Labor Market, Pension design,
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01May

An Equilibrium Theory of Retirement Plan Design

By Ryan Bubb and Patrick L. Warren We develop an equilibrium theory of employer-sponsored retirement plan design using a behavioral contract theory approach. The operation of the labor market results in retirement plans that generally cater to, rather than correct, workers' mistakes. Our theory provides new explanations for a range of facts about retirement plan design, including the use of employer matching contributions and the use of default contribution rates in automatic enrollment plans that lower many workers' savings....

May 1, 2020
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