July 2022
28Jul

Trust and Retirement Preparedness: Evidence from Singapore

By Benedict S. Koh, Olivia S. Mitchell & Joelle H. Fong Trust is an essential component of the financial system, and distrust can undermine saving and economic growth. Accordingly, prior research has shown that survey responses to a question about ‘trust in people’ are associated with household willingness to invest in the stock market. Nevertheless, little is known about how trust shapes economic behaviors predictive of retirement preparedness. Our study draws on the Singapore Life Panel (SLP®), a high-frequency internet...

July 28, 2022
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22Jul

The Effects of Myopia on Retirement Savings Decisions

By Justin van de Ven Recent pensions policy debate in the United Kingdom has emphasised the role of behavioural myopia in justifying state involvement in retirement provisions (e.g. Pensions Commission, 2005, pp. 68-69, and op.cit.). In this regard, it appears that the public debate has gotten slightly ahead of the economic literature, as there currently exist very few studies that consider the empirical support for myopia on field data, or the practical implications of myopia for behavioural responses to policy...

July 22, 2022
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22Jul

Myopic Savings Behaviour of Future Polish Pensioners

By Sonia Buchholtz, Jan Gaska & Marek Góra Low saving rates combined with low effective retirement age herald old-age poverty. This paper examines the preferred strategies of future Polish pensioners in order to sustain the standard of living in the future. A two-step approach is used: as a first-best strategy, we explore determinants of supplementary saving with binary logistic models; as a second-best strategy, we examine alternative options with principal component analysis. Future retirees rarely accumulate long-term savings, do not use...

July 22, 2022
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08Jul

The Role of Longevity Annuities in Different Socioeconomic Classes: A Canadian Case Study

By Rui Zhou, Johnny Siu‐Hang Li & Kenneth Zhou A longevity annuity is a deeply deferred annuity which begins payments very late in life. By transferring some of the risk of outliving retirement savings at advanced ages to annuity providers, longevity annuities provide retirees with enhanced later-life financial security. This paper aims to investigate the impact of longevity annuity provision on retirement income planning for Canadians, on the basis of the tax rules and retirement system in Canada. The research...

July 8, 2022
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June 2022
24Jun

Financial Literacy, Gender and Investment Choices

By Xin Wen, Zhiming Cheng & Massimiliano Tani Over the past thirty years Chinese households have enjoyed substantive increases in income and savings and witnessed a rapidly developing financial market offering investment choices and risks away from bank deposits – the traditional form of financial investment. We explore whether this evolving landscape has been advantageous to every investor or mainly those with better financial literacy, by focusing on the portfolio decisions of the household head, by gender. Using data from...

June 24, 2022
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24Jun

The Effects of the Minimum Pension Reform in a Defined Contribution Pension System: The Case of Chile

By Jorge Sabat Using longitudinal data on roughly 16,800 low-income workers, I estimate the effects of a reform that introduced a solidarity pillar on the Chilean defined contribution pension system. I specifically test for a negative effect on the propensity to save for retirement that would have arisen from the disincentives caused by the introduction of an implicit tax on pension savings, as predicted by a theoretical life-cycle model. Empirically, I document a negative and significant effect on the propensity...

June 24, 2022
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May 2022
26May

Does Financial Education in High School Affect Retirement Savings in Adulthood?

By Melody Harvey & Carly Urban Since individuals are increasingly required to manage their own retirement portfolios, policy levers that increase retirement planning and saving have become increasingly important. We use variation in timing and presence of state-required personal finance coursework in high schools to estimate the effect of the financial education coursework on the likelihood of holding and amount in retirement accounts in adulthood (ages 25–40). Our results show no definitive increases in account ownership, non-retirement investment accounts, or...

May 26, 2022
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Serenity Now, Save Later? Evidence on Retirement Savings Puzzles from a 401(K) Field Experiment
26May

Serenity Now, Save Later? Evidence on Retirement Savings Puzzles from a 401(K) Field Experiment

By Saurabh Bhargava & Lynn Conell-Price Economists have advanced several psychological frictions to explain why many 401(k)-eligible employees undersave for retirement despite generous matching incentives. We provide evidence on four of these frictions through a field experiment randomizing undersaving employees to information- and incentive-based treatments linked to a survey assessing each friction’s baseline incidence. We describe four main findings: (1) We corroborate prior work showing pervasive deficits in retirement literacy and their correlation with saving but reject any meaningful increase...

May 26, 2022
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Progressing Towards Efficiency: The Role for Labor Tax Progression in Reforming Social Security
19May

Progressing Towards Efficiency: The Role for Labor Tax Progression in Reforming Social Security

By Krzysztof Makarski, Joanna Tyrowicz & Oliwia Komada We study interactions between progressive labor taxation and social security reform. Increasing longevity puts fiscal strain that necessitates the social security reform. The current social security is redistributive, thus providing (at least partial) insurance against idiosyncratic income shocks, but at the expense of labor supply distortions. A reform which links pensions to individual incomes reduces distortions associated with social security contributions, but incurs insurance loss. We show that the progressive labor tax...

May 19, 2022
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Top-Income Adjustments and Official Statistics on Income Distribution: The Case of the UK
19May

Top-Income Adjustments and Official Statistics on Income Distribution: The Case of the UK

By Stephen P. Jenkins UK official statistics on income distribution have incorporated top-income adjustments to household survey data since 1992. This article reviews the work undertaken by the Department for Work and Pensions and the Office for National Statistics, and the academic research that influenced them, and reflects on the lessons to learn from the UK experience. Source: SSRN 226 views

May 19, 2022
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