October 2019

17Oct

Next decade of defined contributions crucial: Research

The Thinking Ahead Institute, which is based in London, said that retirement systems around the world are on the cusp of significant change. Challenges the research identified when it comes to defined contributions include coverage, adequacy, technology, a lack of trust and a lack of engagement with participants. The research argues that a new version of defined contributions is emerging, to be characterised by hyper-customisation and integrated whole-of-life wealth management. "The system needs to move beyond its role as...

October 17, 2019
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16Oct

Australia. Radical changes ahead for defined contribution

Shifts for the DC organisation of tomorrow – shows that DC is increasingly becoming a post-retirement income provision vehicle, with integrated accumulation phases matched to post-retirement consumption needs. The report calls this “DC 2.0”. “The need for change has been clear for a long time. Even 10 years ago, we were talking of a version 2.0 of DC that was built around the purpose of providing income throughout retirement,” said Bob Collie, head of research at the Thinking...

October 16, 2019
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September 2019

25Sep

The Shift from Defined Benefits to Defined Contributions

We’ve been talking about asset management—which we’ve classified as the management of corporate and institutional investments—and how its very structure has been changing, largely due to innovative and disruptive technology. The first article on this topic circumscribed the rise of asset management in the latter half of the last century and how it enjoyed a 40-year window of unparalleled growth, disrupted finally by economic upheaval and the upsurge in consumer demand, technology, and especially data. How the free flow...

September 25, 2019
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July 2019
05Jul

Reforming Pensions While Retaining Shareholder Voice

By David H. Webber Public pension and labor union funds have been the driving force in diversified shareholder activism. They have also fended off attacks on jobs and proactively created jobs for fund contributors. These funds currently represent almost $4 trillion in assets over which workers have substantial control. That worker control - and the collective nature of defined benefit pension plans - is the necessary precondition for their shareholder activism. Both worker control and collective investment are directly...

July 5, 2019
Articles, Regulation, System Sustainability, , ,
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May 2019

31May

50 States of Gray: An Innovative Solution to the Defined Contribution Retirement Crisis

By Arun Muralidhar Another retirement crisis is looming as one-third of private-sector, typically poor and unsophisticated workers, probably have little to no pension security. The fifty states have decided to enact reforms, but they are unwilling to assume any liability. Effective reform should ensure a target, guaranteed, inflation/standard-of-living-indexed retirement income through death. The book proposes a four-step reform process that articulates roles, responsibilities, and sequencing of steps to effectively address the looming retirement crisis. Current reform models potentially expose...

May 31, 2019
Books, Investing, Pension design, , ,
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24May

Retirement and Social Security

By Giam Cipriani, Tamara Fioroni In this paper, we analyse the effects of demographic change on a PAYG pension system, financed with a defined contribution scheme. In particular we examine the relationship between retirement, fertility and pensions in a three-period overlapping generations model. We focus on both the case of mandatory retirement and the case where the retirement age is freely chosen. In the case of mandatory retirement, increasing longevity has an unambiguously negative impact on fertility and pension...

May 24, 2019
Aging, Articles, Pension design, Savings, , ,
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March 2019

17Mar

Defined Contribution Pension Plans: Who Has Seen the Risk?

By Peter Forsyth (University of Waterloo - David R. Cheriton School of Computer Science) & Kenneth R. Vetzal (University of Waterloo) The trend towards eliminating defined benefit (DB) pension plans in favor of defined contribution (DC) plans implies that increasing numbers of pension plan participants will bear the risk that final realized portfolio values may be insufficient to fund desired retirement cash flows. We compare the outcomes of various asset allocation strategies for a typical DC plan investor. The strategies...

March 17, 2019
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January 2019

19Jan

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...

January 19, 2019
Adequacy, Articles, Pension design, Savings, Slider-Left, ,
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October 2018

12Oct

Retirement Savings Inequality: Different Effects of Earnings Shocks, Portfolio Selections, and Employer Contributions by Worker Earnings Level

By Joelle Saad-Lessler (The New School for Social Research), Teresa Ghilarducci (Schwartz Center for Economic Policy Analysis (SCEPA); The New School for Social Research), Gayle Reznik (U.S. Social Security Administration) Changes in accumulated retirement savings, particularly in employer-sponsored defined contribution (DC) plan balances, differ by worker’s earnings levels. Earnings shocks, portfolio diversification, and employer contributions to worker’s DC plans affect retirement savings for lower earners more than for higher earners. The authors match Survey of Income and Program Participation data...

October 12, 2018
Articles, Labor Market, Savings, , , ,
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August 2018

06Aug

Stealing To The Youth And Giving To The Old? : Intergenerational Inequalities And Political Dynamics In The Italian Pension System

By Giulio Del Balzo "The contemporary welfare state in capitalist democracies is largely a welfare state for the elderly” (Myles, 1984) Filicide is a recurrent event in ancient mythology, as well as in nature. Just as Kronos devoured his sons, fearing that they would dispossess him from the Gods’ throne, so many animal species, like lions, usually kill their puppies, since they perceive their children as potential threats to their consolidated interests and well-being. So, as in nature and myths, filicide...

August 6, 2018
Aging, Books, Labor Market, ,
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