October 2022
26Oct

Canada. Most employer retirement plans don’t support decumulation

Defined-contribution pension plans and group RRSPs have become the dominant forms of employer retirement programs, but they’re proving inadequate once plan members reach the decumulation phase, a report from the C.D. Howe Institute says. Capital accumulation plans (CAPs) such as DC pensions and group RRSPs focus on accumulating assets rather than providing retirement income for life to plan members. That leaves many retirees unprepared for restructuring their assets into income after they retire, the report said. “We believe the time is right...

October 26, 2022
News, ,
Read more...

September 2022
30Sep

The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets

By Aizhan Anarkulova, Scott Cederburg, Michael S. O'Doherty & Richard W. Sias We use a comprehensive new dataset of asset-class returns in 38 developed countries to examine a popular class of retirement spending rules that prescribe annual withdrawals as a constant percentage of the retirement account balance. A 65-year-old couple willing to bear a 5% chance of financial ruin can withdraw just 2.26% per year, a rate materially lower than conventional advice (e.g., the 4% rule). Our estimates of failure...

September 30, 2022
Articles, Pension design, ,
Read more...
30Sep

Do the Retired Elderly in Europe Decumulate Their Wealth? The Importance of Bequest Motives, Precautionary Saving, Public Pensions, and Homeownership

By Charles Yuji Horioka & Luigi Ventura In this paper, we use micro data on a large number of European countries from the Survey of Health, Ageing and Retirement in Europe (SHARE) to examine the wealth accumulation (saving) behavior of the retired elderly in Europe. To summarize our main findings, we find that less than half of the retired elderly in Europe are decumulating their wealth and that the average wealth accumulation rate of the retired elderly in Europe is...

September 30, 2022
Adequacy, Articles, Savings, , ,
Read more...

June 2022
17Jun

Do Retirees Want to Consume More, Less or the Same as they Age?

By Anqi Chen & Alicia H. Munnell Whether households prefer a constant, increasing, or decreasing path of consumption in retirement has important implications for our understanding of retirement adequacy. Financial planners and researchers often assume that retirees would like to maintain a constant standard of living. Similarly, Social Security benefits are based on the premise that people want steady inflation-adjusted benefits. However, several studies suggest that retired households actually decrease their consumption over time. This brief, which reports the results of...

June 17, 2022
Articles, Pension design, System Characterization, ,
Read more...

May 2022
17May

UK. Public-Sector Workers Delay DC Plan Decumulation

Almost half of public sector employees are taking no action to decumulate defined contribution plan retirement savings once retired, according to Mission Square Retirement research released this month. Josh Franzel, managing director at the Mission Square Research Institute, says the results of their research can help plan sponsors understand how public sector participants and retirees—most of whom also have a defined benefit plan—behave regarding their supplemental defined contribution savings. “It’s important to take a holistic view from a plan sponsor perspective...

May 17, 2022
News, , ,
Read more...
12May

Nigeria. Civil war veterans protest 44 years unpaid pensions in Ibadan

Some retired military men who fought during the Nigerian civil war protested their 44 years of unpaid pensions on Wednesday in Ibadan, Oyo State capital. The group under the umbrella of the First Intake Able Voluntary Retired Or Discharged Ten Or More Years in Military Service, and led by their national coordinator, Babawande Philips, took to the streets of Ibadan with placards bearing various inscriptions. Mr Philips said the ex-military men had continued to suffer in the last 44 years when...

May 12, 2022
News, , ,
Read more...

March 2022
21Mar

UK. ‘Pensioner poverty’ alarm as older people raid pension pots

Older people face the prospect of “pensioner poverty” due to the rising cost of living and the falling value of the stock market, it has been claimed. Figures from online investment platform Interactive Investor show its customers withdrew a quarter more from their private pensions in January as the cost of energy, food and petrol went up. The figures have prompted concern that pensioners will not have enough money to see them through retirement. In January, the average withdrawal from an Interactive...

March 21, 2022
News, Slider, , ,
Read more...

June 2021
04Jun

Why retirees need to heed the ‘sequence-of-returns risk’ in their portfolios

When world markets took a nosedive in the early days of the COVID-19 crisis, many investors worried about the hit they saw on their returns in monthly statements. Those in the early days of retirement were particularly lucky that the pandemic-driven plummet proved to be short-lived. A prolonged downturn of that magnitude at the start of the period when you’re drawing on investments can have disastrous consequences on your long-term portfolio performance, experts say. Still, there are pre-retirement strategies that...

June 4, 2021
News, Slider, , ,
Read more...

September 2020

11Sep

The Impact of Social Security on Pension Claiming and Retirement: Active vs. Passive Decisions

By Rafael Lalive, Arvind Magesan, Stefan Staubli We exploit a unique Swiss reform to identify the importance of passivity, claiming social security benefits at the Full Retirement Age (FRA). Sharp discontinuities generated by the reform reveal that raising the FRA while imposing small early claiming penalties significantly delays pension claiming and retirement, but imposing large penalties and holding the FRA fixed does not. The nature of the reform allows us to identify that between 47 and 69% of individuals are...

September 11, 2020
Articles, Pension design,
Read more...

May 2020
15May

Selfies can help Brazil create a super supplementary pension

By Arun Muralidhar, Robert C. Merton, Alexandre Vitorino Brazilian policy makers and researchers have discussed the introduction of a complementary pension system to complement the Regime Geral de Previdência Social (RGPS), specially for those that want a retirement income above the RGPS ceiling. This article first recommends that the complementary system must be SUPER (Simple, Universal, Portable, Efficient with low cost and Robust Regulatation). It then proposes the adoption of a financial innovation called SeLFIES (Standard-of-Living, Forward-starting, Income-only Securities),...

May 15, 2020
Articles, Investment, Pension design, , , ,
Read more...