February 2019

Managing Uncertainty: The Search for a Golden Discount-Rate Rule for Defined-Benefit Pensions

By Stuart Landon (University of Alberta - Department of Economics), Constance E. Smith (University of Alberta - Department of Economics)This Commentary examines how the choice of a pension plan discount rate affects the tradeoff between the risk of holding insufficient assets to pay promised benefits and the cost of acquiring more assets. The choice of discount rate can have a dramatic effect on the value of a plan’s liabilities and, therefore, the assets needed to meet plan obligations. When...

Hustle and Gig: Struggling and Surviving in the Sharing Economy

By Alexandrea J. Ravenelle Choose your hours, choose your work, be your own boss, control your own income. Welcome to the sharing economy, a nebulous collection of online platforms and apps that promise to transcend capitalism. Supporters argue that the gig economy will reverse economic inequality, enhance worker rights, and bring entrepreneurship to the masses. But does it?In Hustle and Gig, Alexandrea J. Ravenelle shares the personal stories of nearly eighty predominantly millennial workers from Airbnb, Uber, TaskRabbit, and Kitchensurfing. Their...

Assessing Economic Resources in Retirement: The Role of Irregular Withdrawals from Tax-Advantaged Retirement Accounts

By Michael D. Hurd (RAND Corporation; State University of New York at Stony Brook - College of Arts and Science - Department of Economics; National Bureau of Economic Research (NBER)) & Susann Rohwedder (RAND Corporation) Irregular withdrawals from IRAs and DC pensions are not included in standard measures of household income in the CPS or Health and Retirement Study. Yet, among retirees such withdrawals can supplement regular retirement income to finance consumption. It has been difficult to assess their importance,...

The Future of Saving : The Role of Pension System Design in an Aging World

By David Amaglobeli,‎ Hua Chai,‎ Era Dabla-Norris,‎ Kamil Dybczak,‎ Mauricio Soto,‎ Alexander F. Tieman This SDN explores how demographic changes have affected and will affect public and private sector savings, highlighting the interaction between pension systems, labor markets, and demographic variables. Get the book HERE!

State Automatic Enrollment IRAs After the Trump Election: Are They Preempted by ERISA?

By Kathryn L. Moore (University of Kentucky College of Law) In recent years, a number of states have sought to close the retirement savings funding gap by enacting legislation mandating that employers that do not sponsor a voluntary pension plan for their employees automatically enroll their employees in a state-administered IRA program. This article focuses on the most serious legal challenge these programs face: ERISA preemption.  The article begins by providing an overview of the state automatic enrollment IRA programs....

Using Behavioral Science to Increase Retirement Savings in Mexico A look at what we have learned over three years

By Andrew Fertig, Alissa Fishbane, Jaclyn Lefkowitz Acknowledgements We’ve been fortunate to work with many individuals who made this report possible. We are enormously grateful to MetLife Foundation for its support and partnership throughout our efforts, and especially to Evelyn Stark, Alison Jarrett, Gabriela Zapata, and Nalleli Garcia Gutierrez. We’d like to thank our team members Marcela Cheng Oviedo, David Munguía Gómez, and Juan David Robalino for their excellent research and design contributions as well as their dedication...

January 2019

China's High Savings: Drivers, Prospects, and Policies

By Longmei Zhang (International Monetary Fund), Ray Brooks (International Monetary Fund   - Asia and Pacific Department), Ding Ding (International Monetary Fund), Haiyan Ding (International Monetary Fund), Hui He (International Monetary Fund), Jing Lu (International Monetary Fund), Rui Mano (International Monetary Fund) China's high national savings rate-one of the highest in the world-is at the heart of its external/internal imbalances. High savings finance elevated investment when held domestically, or lead to large external imbalances when they flow abroad. Today, high savings mostly emanate from...

China’s High Savings: Drivers, Prospects, and Policies

By Longmei Zhang (International Monetary Fund), Ray Brooks (International Monetary Fund   - Asia and Pacific Department), Ding Ding (International Monetary Fund), Haiyan Ding (International Monetary Fund), Hui He (International Monetary Fund), Jing Lu (International Monetary Fund), Rui Mano (International Monetary Fund) China's high national savings rate-one of the highest in the world-is at the heart of its external/internal imbalances. High savings finance elevated investment when held domestically, or lead to large external imbalances when they flow abroad. Today, high savings mostly emanate from...

Migration, Remittances and Brexit: European Labor Market Integration and Its Effects on Inequality and Convergence

By Pawel Langer (New York University) & Laszlo Tetenyi (New York University) The increase in migration from Eastern to Western Europe after their accession to the European Union (EU) in 2004 resulted in a large increase in remittances to New Member States (NMS) and were comparable in size to FDI or EU funds. This paper adds to the literature by analyzing the impact of remittances and migration jointly, rather than separately, on the integration of EU economies and their implications...

Retirement Savings Adequacy in U.S. Defined Contribution Plans

By Francisco Gomes (London Business School), Kenton Hoyem (Financial Engines, Inc.), Wei-Yin Hu (Financial Engines, Inc.), Enrichetta Ravina (Kellogg School of Management) We evaluate retirement savings adequacy in the U.S. using a large panel dataset comprising the contribution rates, salary, tenure, account value, plan features and asset allocations of more than 300 thousand US workers with a 401(k) account. Our simulations account for medical expenditure, longevity, and investment risks, and realistically model the likelihood of withdrawals due to hardship, job...