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April 2023

UK. £1 million in savings are needed for a comfortable early retirement, experts say”

Savers hoping to retire early with a “comfortable” income will need a pension worth £1m – and to save more than £11,000 a year throughout their career to build up the pot. Early retirement is currently in vogue, with 565,000 workers having left the workforce since the start of the pandemic, according to the House of Lords. While the reasons behind the exodus are unknown, the primary driver is thought to be early retirement among those aged between 50 and...

Mandatory Pension Contributions: Effects on Household Consumption and Savings

By Linda Sandris Larsen, Ulf Nielsson, Mara Nutu & Jesper Rangvid Using rich register data from Denmark, we study whether people save enough to maintain their pre-retirement level of consumption during retirement. We find that 77% of retirees do. This high fraction is driven by mandatory labour market contributions. The 23% of individuals who do not save enough to maintain their pre-retirement level of consumption are less likely to have mandatory pension schemes and do not compensate for the lack...

March 2023

Ghana. Government rolls out pension scheme for cocoa farmers

Government, through Ghana Cocoa Board (COCOBOD), has rolled out the Cocoa Farmers Pension Scheme (CFPS) to ensure a decent pension for cocoa farmers, improve their welfare, and also make farming attractive to the youth. This comes after the Cocoa Management Systems (CMS) recorded some momentous strides after piloting the scheme for three weeks in August 2021 in New Edubiase and some other districts in the Ashanti Region. Just as government and private sector workers contribute during their working life, it has...

UK. New figures show Gender Pension Gap remains stubbornly high

New statistics from trade union, Prospect, provide their latest estimate of the Gender Pensions Gap. They put the gap at 40.5% for 2020-21, essentially unchanged since the figure was first estimated half a decade ago. This is significantly more than the gender pay gap, and represents an average annual £7,100 shortfall. The latest figures show that despite an increased focus on the gap, current government policies are failing to provide any improvement. This has led Prospect to warn of a “ticking...

Pension Provision in Thailand

By Robert Palacios & Himanshi Jain This report documents the current state of pension provision in Thailand and options for reform that would increase the adequacy and sustainability of the pension system. While the focus here is on income support, the welfare of the elderly depends on many other government policies ranging from labor market policies to aged care and health services. It is also important to assess the pension system in terms of its broader impact on fiscal sustainability...

February 2023

Social partner model spreads to small, medium-sized firms in Germany

Social partner model spreads to small, medium-sized firms in Germany The social partner model offering pure defined contribution (DC) plans is spreading mostly among small and medium-sized firms in the chemical sector in Germany, attracting employees who did not show interest in occupational pensions in the past. The German Federation of Chemical Employers’ Associations (BAVC), the social partner that started one of the first pure DC schemes in Germany, is currently seeing demand for social partner models for pensions in the...

U.S. A Retirement Income Distribution Plan Is as Critical as Saving

The majority of your life is spent in accumulation mode — earning a steady income and putting money aside for things like retirement, savings, your child’s education or a dream vacation home. After years of investing and saving, it is critical to shift your mindset out of accumulation mode and into distribution, or decumulation, mode when retirement nears. Making that mental shift is difficult for most, but having a comprehensive wealth plan that includes a retirement income distribution strategy...

January 2023

Financial regret at older ages and longevity awareness

By Abigail Hurwitz & Olivia S. Mitchell Older people often express regret about financial decisions made earlier in life that left them susceptible to old-age insecurity. Prior work has explored one outcome, saving regret, or peoples’ expressed wish that they had saved more earlier in life. The present paper extends attention to five additional areas regarding financial decisions, examining whether older Americans also regret not having insured better, claimed benefits and quit working too early, and becoming financially dependent on...

Pension plan sponsors say their plans are risk averse (but their designs say otherwise)

A new survey from Vanguard finds that sponsors of pension plans say they value lower-risk plans, but don’t always succeed in avoiding risk in their plan design. The report suggests that sponsors of plans may have trouble understanding the level of risk they are taking. The survey also found a continuation of the trend showing that pension plan sponsors are continuing to adjust their plans in ways designed to reduce liability and risk. The new report is the fifth in...

German government to set up foundation with up to €150bn for first-pillar pension reform

The German government plans to build a foundation under public law called Stiftung Generationenkapital to manage up to €150bn in assets in the long term for an equity fund to turn the first-pillar pension system into a partially funded platform based on the Aktienrente concept. The government will start to build the equity pension fund this year with starting capital worth €10bn, setting up a foundation that will “be anchored in law and independent from politics” to stabilise the first-pillar...