March 2020

28Mar

Who Takes Advantage of Tax-Deferred Savings Programs? Evidence From Federal Income Tax Data

By David P. Richardson, David Joulfaian This paper provides insight into the attributes of wage-earning households that participate in tax-deferred retirement savings plans. Examining data from federal tax returns, we find that approximately 52 percent of individuals and 55 percent of households participated in a retirement savings program in 1996. Excluding households with wages within the 1996 poverty thresholds and individuals under age 21 or over age 70, the age-wage restricted participation rates were 66 percent and 79 percent...

March 28, 2020
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28Mar

Opting Out of Social Security: An Idea That’s Already Arrived

By David P. Richardson Under current law, workers can partially opt out of Social Security and reduce Medicare tax liability by accepting compensation in forms exempt from payroll taxes. Changing forms of compensation has an ambiguous effect on a worker's lifetime consumption possibilities. With respect to Medicare, all households are better off since they reduce tax contributions to a fixed benefit. For Social Security, the effect is ambiguous since the tax reduction implies future benefit reductions. Analyzing a hybrid...

March 28, 2020
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26Mar

Europe. Social protection pays off

If the COVID-19 pandemic has sent the world one message, it is that we are only as safe as the most vulnerable among us. Those who are unable to quarantine themselves or to get treatment endanger their own lives and the lives of others, and if one country cannot contain the virus, others are bound to be infected, or even re-infected. And yet, around the world, social-protection systems are failing miserably at safeguarding the lives and livelihoods of vulnerable...

March 26, 2020
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26Mar

UK. PFS pushes for grace period on PI amid ‘evidence of serious impact’

The Personal Finance Society has called for a four-month grace period for advisers whose professional indemnity insurance is due for renewal during the coronavirus lockdown. In a letter sent to the Financial Conduct Authority and HM Treasury this week the professional body asked for regulatory concessions to help advisers at at time when "demand for their help has never been greater, yet pressure on their own resources are stretched". This included a call for advisers to be granted...

March 26, 2020
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25Mar

UK. Parliament pension fund cuts fossil fuel investments

Parliament’s pension fund has made record investments in renewable energy and cut its exposure to fossil fuel companies to bring MPs’ pensions in line with the government’s climate action targets. A report from the £700m pension fund showed that almost a third is now being invested in low carbon and environmentally sustainable funds following calls from hundreds of MPs to align the fund with the government’s legally binding climate commitments. Read also Swedish Pension AP1 Divests From Fossil Fuels ...

March 25, 2020
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25Mar

German federation proposes standard product for private pensions

The Federation of German Consumer Organisations – vzbv – and the state of Hesse have proposed a standard product, or Extra Rente, for private pensions to reform the system. The proposal aims to fix some of the problems brought by the privately funded pension system – Riester-Rente – since its introduction almost 20 years ago, precisely at the time when the government coalition weighs up possible changes. Dorothea Mohn, head of the financial market team at Vzbv, told IPE...

March 25, 2020
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25Mar

Swedish Pension AP1 Divests From Fossil Fuels

Swedish pension fund AP1 said it will no longer invest in fossil fuel companies. The SEK365.8 billion ($35.8 billion) fund said the transition to a low-carbon economy represents a significant amount of uncertainty for companies involved in coal, oil, and natural gas activities and that “continued investments related to these activities can increase the financial risk exposure of the fund.” The fund said the move is a result of its work to identify and analyze climate-related financial risks in...

March 25, 2020
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24Mar

US. Pension Plan Funding Relief Needed ASAP

Last week, in a throwaway line in an article on multiemployer pensions, I considered it something of a given that, following a script similar to the 2008 crisis, Congress would provide “funding relief” to single-employer pension plan sponsors, allowing them to defer contributions to their pension plans which would otherwise be substantially elevated, and that it was multiemployer plans, with their pre-existing funding challenges, that faced greater difficulties. Unfortunately, that isn’t quite right. Single-employer plans are facing their own...

March 24, 2020
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24Mar

UK. Parliamentary pension fund steps up renewables investment, but MPs insist full divestment urgently needed

MPs and peers have today again called on Parliament's pension fund to divest from fossil fuel assets, after its latest annual report revealed that despite an uptick in green investments the fund is still heavily reliant on fossil fuel majors. The cross-party Divest Parliament initiative today responded to the recently released annual report from the Parliamentary Contributory Pension Fund (PCPF), which revealed that the fund has significant increased its interest in low carbon assets while reducing its exposure to...

March 24, 2020
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24Mar

Australia’s pensions industry in urgent talks on coronavirus crisis changes

Australia's A$3 trillion ($1.72 trillion) pension industry was not consulted on the federal government's decision to allow the unemployed and sole traders early access to retirement savings and is now in urgent talks about the move, sources said. Read also New ZealandTime to rethink everything especially super policy Prime Minister Scott Morrison and Treasurer Josh Frydenberg on Sunday revealed a A$66 billion fiscal stimulus package including measures allowing workers to take up to A$20,000 out of their superannuation savings over...

March 24, 2020
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