September 2020

Financial Access Challenges for Older Adults

By Joe Valenti In 2017, an estimated 8.4 million households in the United States, representing about 14 million adults, had no checking or savings account at a bank or credit union.1 This figure includes roughly 3.5 million households headed by someone age 50 or older.2 When combining this population—often called the unbanked—with households that have accounts but still use some alternative services such as check cashers or payday lenders, these numbers rise to nearly...

Digital financial services

By World Bank Access to affordable financial services is critical for poverty reduction and economic growth. Countries with deeper, more developed financial systems enjoy higher economic growth and larger reductions in poverty and income inequality. Access to financial services also increases opportunities and resilience for the poor, particularly women. Despite this, 65 percent of adults in the world’s poorest economies lack access to even the most basic transaction account that would allow them to send and receive...

Demographic Obstacles to European Growth

By Thomas F. Cooley, Espen Henriksen, Charlie Nusbaum Since the early 1990's the growth rates of the four largest European economies -- France, Germany, Italy, and the United Kingdom -- have slowed. This persistent slowdown suggests a low-frequency structural change is at work. A combination of longer individual life expectancies and declining fertility have led to gradually aging populations. Growth accounting identifies the following five sources of economic growth: total factor productivity, capital deepening, labor supply on...

(Mis)Allocation Effects of an Overpaid Public Sector

By Tiago Cavalcanti, Marcelo Rodrigues Santos There is a large body of evidence showing that for many countries the structure of wages and pensions and the labor law legislation are different for public and private employees. Such differences affect the occupational choice of agents and might generate some type of misallocation. We develop a life-cycle model with endogenous occupational choice and heterogeneous agents to study the implications of an overpaid public sector. The model is estimated to be consistent...

The Quality of Employment (QoE) in Nine Latin American Countries: A Multidimensional Perspective

By Kirsten Sehnbruch This paper proposes a methodology for measuring the quality of employment from a multidimensional and public policy perspective in Latin American developing countries (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, and Uruguay) using household and labor force survey data from 2015. The purpose of this paper is to demonstrate that the QoE can be measured using a multidimensional methodology that can inform policy makers about the state of their labor markets in a way...

MetLife to Face Appeal of Suit Over $500 Million Annuity Error

A group of MetLife Inc. investors will ask Delaware’s top court to revive oversight claims over the insurer’s practice of downplaying its liabilities by counting pensioners as dead if they didn’t respond to its letters, instead of consulting official records. The lawsuit, dismissed by a Chancery Court judge in August, concerned MetLife’s “pension risk transfer” operations, a long-running business line that involves managing pension obligations for employers. The insurer for decades based its annuity payments on letters sent to...

UK. Government encourages pension schemes to invest in green tech and infrastructure

Measures aimed at encouraging pension schemes to invest in a more diverse range of long term assets, including green technology and infrastructure, have been outlined by the government. It has launched a consultation and is seeking views on additional steps to encourage the consolidation of smaller pension schemes into larger schemes. The government believes a key wider benefit of an increase in consolidation could be the increased share of assets saved in large, defined contribution (DC) schemes potentially able to...

Australia. Aged care workforce stressed and under pressure

Most Australian aged care managers reported an increased workload and stress in a recent survey, as industry experts warned immediate action is needed to stop staff walking away. A survey of more than 250 residential aged care providers by risk and compliance advisors CompliSpace found 78 per cent of managers felt under more stress and 92 percent were doing more paperwork since the introduction of the Aged Care Quality Standards. CompliSpace chief executive officer David Griffiths said the sector...

S. Korea’s state pensions to face steep shortfall in 20 yrs: report

South Korea’s state-managed pension and insurance funds may dry up earlier than expected, suggesting the need of dramatic changes to cope with demographic trends and funding shortfalls in the foreseeable future, a government report projected. According to the fiscal outlook report for 2020-2060 by the Ministry of Economy and Finance, state-run National Pension Service, the world’s third largest pension fund, is estimated to return to a net loss by 2040 if conditions remain unchanged from now. The analysis projects...

UK. Credit downgrades present ‘serious challenges’ for pension schemes – AXA IM

A fall in the average credit quality of fixed income indices and increased competition for high-quality assets presents “serious challenges” for pension schemes, AXA Investment Managers (IM) has warned. Since the beginning of the Covid-19 pandemic, rating agencies have down graded over £778bn of corporate issues across global indices, leaving high quality assets in “short supply” during a period of rising demand. AXA IM Buy and Maintain credit team portfolio manager, Simon Baxter, stated that the concentration in high grade...