February 2021
08Feb

Simple error can leave Brits with £50,000 less than expected in pension pot

Millions of Brits are at risk of being caught short by over-estimating their state pension payments by up to £50,000, a consumer watchdog has warned. Research by Which? revealed three in 10 believe they will get thousands more through their retirement years because they have got their figures wrong. Only three in 10 knew the average weekly state pension is worth around £150 or £7.800 a year. But with guesses ranging from £175 to £200 a week or up to £10,400 a...

February 8, 2021
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04Feb

Greece’s number of retirees at poverty risk surprises

Eurostat, the statistical office of the European Union, released new data today that measures how many pensioners are at risk of poverty, and their findings on Greece may very well surprise you. The statistical office said “In 2019, the proportion of pensioners aged over 65 at risk of poverty in the EU stood at 15.1%, slightly above the figure of 14.5% in 2018 as well as above the risk of poverty of working age population (16 to 64 years)...

February 4, 2021
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January 2021

29Jan

Unearned Income and Labor Supply: Evidence from Survivor Pensions in Austria

By René Böheim, Michael Topf We study the effect of lower unearned income on labor supply. To identify the causal effect of an unexpected reduction in unearned income, we exploit a policy reform that lowered survivor pensions in Austria. Men widowed after the survivor pension reform received an approximately 34% lower survivor pension than men widowed before the reform. We follow the employment history of both groups for 150 months and estimate the reform’s effect on labor supply using...

January 29, 2021
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28Jan

South Africa take-home pay numbers decline

The steep decline in the number of take-home payments has adjusted the average South African salary by a few percentage points, according to the BankservAfrica Take-home Pay Index (BTPI) for December 2020. “The real average take-home pay increased by 2,1% year-on-year,” says Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements. “The reason behind this is not positive. The average salary rose as a result of the decline in the number of lower paid earners that led to a 5,4% nominal...

January 28, 2021
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27Jan

How to help an ageing population stay wealthy for longer

Longevity can be harnessed as a force for good and a driver of economic growth. Financial providers increasingly diversify their products to support the wealth and lifespan of their consumers. Nudging behaviour towards financial planning and wellbeing can lead people to make better decisions. Two thirds of the world’s population will be 65 years and above by 2050, according to the UN, and the projection for the global ageing economy is already estimated to reach $27 trillion by 2025...

January 27, 2021
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21Jan

The Benefit of Diversified Guaranteed Income for Retirees: Combining Immediate Fixed and Immediate Variable Annuities

By David Blanchett This paper explores the potential benefits of developing a retirement income that considers both immediate fixed annuities (IFA) and immediate variable annuities (IVA) using a stochastic utility model combined with a scenario framework. Optimal annuity allocations vary considerably across household type, but certainty equivalent retirement income increases by 20 percent, on average, when incorporating annuities. Total annuity allocations increase when both IFAs and IVAs are considered, and retirees realize only approximately two-thirds of the benefits of...

January 21, 2021
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21Jan

US. Pandemic Puts More Households at Risk in Retirement

The National Retirement Risk Index (NRRI), calculated every three years, measures the share of American households that are at risk of not being able to maintain their pre-retirement standard of living in retirement. “Since the Great Recession, the NRRI has shown that even if households work to age 65 and annuitize all their financial assets, including the receipts from reverse mortgages on their homes, roughly half of households are at risk,” according to the Center for Retirement Research at...

January 21, 2021
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14Jan

Maximizing Utility of Withdrawals in Retirement and the Efficiency of Required Minimum Distributions

By Chester Chambers We focus on a simplified problem for a risk-averse retiree seeking to maximize utility associated with annual spending and a remaining value at the end of the problem horizon when the funds are extracted from a portfolio that includes a risk-free and a risky asset. To organize discussions about this setting we utilize a novel metric which we label “Efficiency”. This measurement compares the utility derived from annual withdrawals and the final value with a benchmark...

January 14, 2021
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14Jan

How Poor Bangladeshi Households Behave Regarding Access to Commitment Savings Products

By Carolina Laureti, Mélanie Volral Access to commitment savings products is known to increase poor households’ savings. In this paper we analyze the process through which households change their savings behavior, by exploiting a unique dataset released by SafeSave, a Bangladeshi microfinance institution that launched the Long Term Savings commitment product in 2009. First, we find that households increase their savings a few months before they open the commitment product. Then, distinguishing early takers (who take up the commitment...

January 14, 2021
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08Jan

How Measuring Replacement Income Can Aid Assessment of Public Pension Plans

Pew evaluates a key predictor of career workers’ standard of living in retirement. The Pew Charitable Trusts uses three retirement security metrics to assist policymakers in evaluating how well their plans are expected to prepare public workers for retirement. This fact sheet focuses on the replacement income ratio, a commonly cited indicator that illustrates whether a worker might expect to maintain his or her standard of living in retirement.1 This ratio—also referred to as the replacement rate—is the percentage of a worker’s...

January 8, 2021
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