March 2023
31Mar

Frames, Incentives, and Education: Effectiveness of Interventions to Delay Public Pension Claiming

By Franca Glenzer, Pierre-Carl Michaud & Stefan Staubli Many people forgo a higher stream of public pension income by claiming early. We provide both quasi-experimental and survey-experimental evidence that the timing of public pension claiming is relatively inelastic to changes in financial incentives in Canada. Using the survey experiment, we evaluate the effect of two different educational interventions and different ways of framing the incentive to delay claiming. While all three types of interventions induce delays, these interventions have heterogeneous...

March 31, 2023
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24Mar

Pensions and the Nordic Welfare Model

By Torben M. Andersen Within the frame of the Nordic welfare model, pension system design has taken very different routes. While the overall aims in terms of distribution and replacement rates are similar, the division of labour between defined benefit and contribution as well as pay-as-you-go versus funded schemes differs significantly. The main characteristics of the pension systems in the Nordic countries are presented, and outcomes relating to pension adequacy in terms of poverty and replacement rates are discussed. Specific...

March 24, 2023
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17Mar

Longevity, Health and Housing Risks Management in Retirement

By Pierre-Carl Michaud & Pascal St-Amour Annuities, long-term care insurance and reverse mortgages remain unpopular to manage longevity, medical and housing price risks after retirement. We analyze low demand using a life-cycle model structurally estimated with a unique stated-preference survey experiment of Canadian households. Low risk aversion, substitution between housing and consumption and low marginal utility when in poor health explain most of the reduced demand. Bequests motives are found to be a luxury good and play a limited role....

March 17, 2023
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17Mar

The Health-Consumption Effects of Increasing Retirement Age Late in the Game

By Eve Caroli, Catherine Pollak & Muriel Roger Using the differentiated increase in retirement age across cohorts introduced by the 2010 French pension reform, we estimate the health-consumption effects of a 4-month increase in retirement age. We focus on individuals who were close to retirement age but not retired yet by the time the reform was passed. Using administrative data on individual sick-leave claims and non-hospital health-care expenses, we show that the probability of having at least one sickness absence...

March 17, 2023
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February 2023
24Feb

Fixed and Variable Longevity Annuities in Defined Contribution Plans: Optimal Retirement Portfolios Taking Social Security into Account

By Vanya Horneff, Raimond Maurer & Olivia S. Mitchell This paper investigates retirees’ optimal purchases of fixed and variable longevity income annuities using their defined contribution (DC) plan assets and given their expected Social Security benefits. As an alternative, we also evaluate using plan assets to boost Social Security benefits through delayed claiming. We determine that including deferred income annuities in DC accounts is welfare enhancing for all sex/education groups examined. We also show that providing access to well-designed variable...

February 24, 2023
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17Feb

The Future of Global Retirement 2023

By Smart As perceptions of retirement shift across the world, in line with emerging technology and reforms to legislation, the industry needs to keep up and remain one step ahead. At Smart, we’re continuing to lead the way in research and development in this space, and as part of our mission, we’ll continue to share some of the insights we gain around the needs of savers across the world. In 2021, we launched our first ‘Future of Global Retirement’ report, taking...

February 17, 2023
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17Feb

What matters for annuity demand: Objective life expectancy or subjective survival pessimism?

By Karolos Arapakis & Gal Wettstein Objective life expectancy and subjective survival pessimism (defined as the difference between objective and subjective life expectancy) may both affect the demand for annuities. The question this project answers is: how do these two explanations contribute to annuitization decisions in practice? To explore this question, the analysis estimates regression models that include objective life expectancy, subjective survival pessimism, and other characteristics that are linked to annuitization decisions. The results show that, as one would...

February 17, 2023
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08Feb

New Evidence on the Demand for Advice within Retirement Plans

By Jonathan Reuter & David P. Richardson We study demand for advice by retirement plan participants using administrative records from defined contribution retirement plans offered by 23 institutions where TIAA is the sole recordkeeper. We distinguish advice on asset allocation from advice on retirement income levels, and between participants who are and are not eligible for TIAA’s wealth management services. We find that advice seeking increases with age, account balance and annual contribution level, and is highest among those eligible for wealth management services. However, we...

February 8, 2023
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08Feb

Early Pension Withdrawals in Chile During the Pandemic

By Olga Fuentes, Olivia S. Mitchell & Félix Villatoro Chile, with one of the largest and best funded defined contribution programs in Latin America, held over USD $200 bn in assets at the onset of the Covid-19 crisis, or more than 80% of GDP. Reacting to populist pressures during the pandemic, however, the government gave non-retired participants three separate opportunities to tap into their retirement accounts, leaving some 4.2 million participants with zero retirement savings and draining around $50 bn...

February 8, 2023
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