July 2017

30Jul

Pension Funds, Capital Markets, and the Power of Diversification

By Fiona Stewart & Inna Remizova (World Bank); Romain Despalins (OECD) The potential for pension funds to contribute to capital markets and thereby economic growth has been argued on a theoretical basis and demonstrated empirically. However, reforms fostering the development of funded pension systems have not had the economic impact hoped for in some countries. Pension fund portfolios in some cases have remained highly exposed to shorter-term assets, such as bank deposits and shorter-term government bonds. This, in turn, has led to relatively...

July 30, 2017
Articles, Investing, Pension design,
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30Jul

Optimal Longevity Risk Transfer and Investment Strategies

By Samuel H. Cox (University of Manitoba), Yijia Lin (University of Nebraska) & Sheen Liu (Washington State University) Given the rising cost of maintaining defined benefit (DB) pensions, there has been a surge of activities in recent years by DB plan sponsors to transfer their pension risk through strategies such as buy-ins and buy-outs. As buy-in and buy-out transaction pipelines grow, insurers actively participating in the buy-in and buy-out markets are exposed to significant longevity risk embedded in pension schemes....

July 30, 2017
Articles, Investing, Management, Pension design, ,
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16Jul

Liquidity and Solvency in Pay-as-You-Go Defined Contribution Pension Schemes: A Continuous OLG Sustainability Framework

By Jennifer Alonso-García (University of New South Wales) & Pierre Devolder (Catholic University of Louvain) Notional Defined Contribution pension schemes are defined contribution plans which are pay-as-you-go financed. From a design viewpoint, the countries where NDCs have been implemented cannot guarantee sustainability due to the choice of notional return paid to the contributions and the indexation rate paid to pensions. We study how the scheme should be designed to achieve liquidity and solvency with a limited set of assumptions in...

July 16, 2017
Articles, Pension design, Regulation, Savings,
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16Jul

Policy Reflection: Letter of Credit Usage by Defined Benefit Pension Plans in Canada

By Norma L. Nielson & Peggy L. Hedges (University of Calgary) There is an argument to be made for letting corporations hold off on contributing to their employees’ defined benefit pension plans, as long as there is a guarantee the cash will come eventually. That is the reason that provincial governments began allowing creditworthy companies to instead provide a letter of credit, backed by a Canadian bank, guaranteeing the cash deposit, and secured by the company’s line of credit or...

July 16, 2017
Adequacy, Articles, Pension design, Savings, ,
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09Jul

Policy Reflection: Letter of Credit Usage by Defined Benefit Pension Plans in Canada

By Norma L. Nielson & Peggy L. Hedges (University of Calgary) There is an argument to be made for letting corporations hold off on contributing to their employees’ defined benefit pension plans, as long as there is a guarantee the cash will come eventually. That is the reason that provincial governments began allowing creditworthy companies to instead provide a letter of credit, backed by a Canadian bank, guaranteeing the cash deposit, and secured by the company’s line of credit or...

July 9, 2017
Articles, Labor Market, Pension design, Regulation,
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09Jul

A Study on the Prospects and Problems of Unorganised Labours in India

By Ravindra B.K. (Alliance University), Pradeep M. D. & T. Ramjani Sab (Srinivas Institute of Management Studies) India comprises 43.7 crore people working with the skill in the residual sector as unorganized labours. Around 24.6 core engage in agriculture, 4.4 crore in construction and remaining people in the manufacturing and service sectors. This sector faces eventual deficiencies in regulations over employment, remuneration pattern, poor employer and employee relationship and casual work culture. Informal sector covers large number of workers from...

July 9, 2017
Articles, Labor Market, Pension design, Regulation,
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02Jul

PEPP – Towards a Harmonized European Legislative Framework for Personal Pensions

By Hans van Meerten & Sebastiaan Niels Hooghiemstra LL.M (Utrecht University) In the last couple of years questions arose how the PEPP should ideally be regulated and the European Commission and various interest groups, till now, have not found a solution for all possible problems in developing a common regulatory framework yet. For that purpose, this Report focused on how the PEPP could ideally be regulated. It discussed the PEPP and the PPP, how PEPPs as a ‘wrapper product’ should be...

July 2, 2017
Adequacy, Articles, Corporate Governance, Pension design, ,
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June 2017

25Jun

Long-Term Effects of Extended Unemployment Benefits for Older Workers

By Tomi Kyyrä & Hanna Pesola (VATT Institute for Economic Research) This paper examines the long-term effects of extended unemployment benefits that older unemployed can collect until retirement in Finland. We consider a reform that increased the age threshold of this scheme from 55 to 57 for people born in 1950 or later. Our regression discontinuity estimates show that postponing eligibility by two years increased employment over the remaining working career by seven months. Despite the corresponding reduction in unemployment,...

June 25, 2017
Articles, Labor Market, Pension design
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25Jun

Automatic Enrollment and Choices of Pension Plans: An Experimental Study in Brazil

By Antonio Gualberto Pereira (Universidade Federal da Bahia) & Luís Eduardo Afonso (University of Sao Paulo) One alternative presented in the literature to increase adhesion to pension plans is to modify the default of choices from opt in (to adhere to the plan) to opt out (leave the plan), a nudge typical of the libertarian paternalism (Kahneman, 2002). An experimental design was adopted, adapted from a tool by Hey (2007). The research was made available with the assistance of Questionpro©...

June 25, 2017
Adequacy, Articles, Pension design, Regulation
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18Jun

Chapter 19: Individual Biases in Retirement Planning and Wealth Management

By James E. Brewer & Charles H Self III Around the globe, the gradual move from defined benefit pensions to defined contribution pensions has increased the need for individual retirement planning. Examples of this include U.S. savings rates at historic lows, poor retirement prospects for citizens in developed countries, and the disparaging gap between investor returns and market returns. Research indicates that individuals working with a financial advisor generally receive better results than those who do not. Working with a...

June 18, 2017
Adequacy, Articles, Pension design, Savings, ,
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