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July 2017

30Jul

Optimal Longevity Risk Transfer and Investment Strategies

By Samuel H. Cox (University of Manitoba), Yijia Lin (University of Nebraska) & Sheen Liu (Washington State University) Given the rising cost of maintaining defined benefit (DB) pensions, there has been a surge of activities in recent years by DB plan sponsors to transfer their pension risk through strategies such as buy-ins and buy-outs. As buy-in and buy-out transaction pipelines grow, insurers actively participating in the buy-in and buy-out markets are exposed to significant longevity risk embedded in pension schemes....

July 30, 2017
Articles, Investing, Management, Pension design, ,
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March 2017

27Mar

Towards an Equitable and Sustainable Points System: A Proposal for Pension Reform in Belgium

By Erik Schokkaert (Catholic University of Leuven), Pierre Devolder (Catholic University of Louvain), Jean Hindriks (University of London) & Frank Vandenbroucke (University of Amsterdam) We describe the points system that has been proposed by the Belgian Commission for Pension Reform 2020-2040. Intragenerational equity can be realised in a flexible and transparent way through the allocation of points within a cohort. The intergenerational distribution is determined by fixing the value of a point for the newly retired and a sustainability parameter...

March 27, 2017
Aging, Articles, Labor Market, System Sustainability, , , ,
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26Mar

Redistribution Effect and Pension Choice: Theory and Evidence

By Hulai Zhang (Peking University) This paper mainly focuses on two issues, the factors influencing pension choice and the redistribution effect of the pension system in China. Our model studies the trade-offs of relative financial benefits and risks provided by various plans, as well as the accessibility to specific pension plans and accessibility to information on pensions. The features examined include individual features such as hukou, gender and education, family features like marital status and work features like job types....

March 26, 2017
Articles, Labor Market, Pension design, Regulation, , , ,
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17Mar

Life-Cycle Consumption, Investment, and Voluntary Retirement with Cointegration between the Stock and Labor Markets

By Min Dai, Shan Huang & Seyoung Park (National University of Singapore) We present an optimal life-cycle consumption, investment, and voluntary retirement model for a borrowing and short sale constrained investor who faces cointegration between the stock and labor markets. With reasonable parameter values, there exists a target wealth-to-income ratio under which the investor does not participate in the stock market at all, whereas above which the investor increases the proportion of financial wealth invested in the stock market as...

March 17, 2017
Articles, Investing, Labor Market, Pension design, ,
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February 2017

04Feb

Why Do Firms Offer Risky Defined Benefit Pension Plans?

By David A. Love, Paul A. Smith, & David Wilcox Even risky pension sponsors could offer essentially riskless pension promises by contributing a sufficient level of resources to their pension trust funds and by investing those resources in fixed-income securities designed to deliver their payoffs just as pension obligations are coming due. However, almost no firm has chosen to fund its plan in this manner. We study the optimal funding choice for plan sponsors by developing a simple model of...

February 4, 2017
Articles, Corporate Governance, Investing,
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04Feb

Should Risky Firms Offer Risk-Free DB Pensions?

By David A. Love, Paul A. Smith, & David Wilcox We develop a simple model of pension financing to study the effects of pension risk on shareholder value. In the model, firms minimize costs, total compensation must clear the labor market, and a government pension insurer guarantees a portion of promised benefits. We find that in the absence of mispriced pension insurance, the optimal pension strategy under most specifications is to immunize all sources of market risk. Mispriced pension insurance,...

February 4, 2017
Articles, Corporate Governance, Investing,
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04Feb

Finance and Labor: Perspectives on Risk, Inequality and Democracy

By Sanford M. Jacoby This paper considers the association between financial development and labor-market outcomes such as risk and inequality. The relationship is not straightforward, however. It is mediated by politics at the national and corporate levels. Politics spurs financial development, which sets in motion countervailing efforts to restrain the effect of finance on inequality and risk. The empirical analysis relies on historical, comparative, and contemporary evidence. Emphasis is given to recent events in the United States: the political origins...

February 4, 2017
Articles, Labor Market, Regulation, System Sustainability, , ,
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04Feb

Regulation and Supervision of Pension Funds in India

By S. P. Subedar Power Point Presentation. Occupational pension funds need to be regulated and supervised. A statutory role in the form of Scheme Actuary needs to be created for DB pensions.Adequate information need to be provided annually to the DC pension subscribers about the likely accumulation and pension pay out on their retirement. These measures would ensure that all pension issues are addressed in a holistic manner and cohesiveness is brought in regulation and supervision of pension business. (more…)

February 4, 2017
Articles, Regulation, Supervision, , ,
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04Feb

Pension Fund Reform and European Financial Markets

By E. Phillip Davis Pension reform is widely seen as essential in order to defuse the difficulties EU governments would otherwise face in respect of their social security pension systems in a context of population ageing. Particularly when such reform involves funding of future pensions, it may have radical implications for European financial markets, entailing important changes in the demand for financial assets by the private sector and qualitative developments in capital markets and banking which may impinge on banks...

February 4, 2017
Articles, Investing, Regulation,
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04Feb

New Architectures in the Regulation and Supervision of Financial Markets and Institutions: The Netherlands

By Henriëtte Prast & Iman Van Lelyveld In recent years, several European Union member states have modified the institutional design offinancial supervision. These reforms pose the question which considerations have led to the different models chosen in these countries. We analyse the considerations in the Netherlands leading to the choice in 2002 of the twin -peaks model of financial supervision. The new model is based on the objectives of supervision. Thus, a separate authority is responsible for conduct-ofbusiness supervision, whereas...

February 4, 2017
Articles, Regulation, Supervision, ,
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