July 2019

26Jul

Defined Benefit Pensions and Homeownership in the Post-Great Recession Era

By Tim Murray While housing equity accounts for a large portion of many retiree’s savings portfolios, they are not using their equity to increase consumption in retirement as suggested by the Life-Cycle Hypothesis. Defined benefit plans provide a guaranteed source of income in retirement where the household bears no risk, whereas households with a defined contribution plan are subject to potential risk depending on their asset allocation. This paper examines whether having a defined benefit plan mitigated some of...

July 26, 2019
Articles, Investing, Pension design, , , , ,
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26Jul

Retirement Security: Trends in Corporate Restructurings and Implications for Employee Pensions

By Charles A. Jeszeck, David Lehrer, Charles J Ford, Jessica Moscovitch, James Bennett, Lilia Chaidez, Michelle Munn, Jessica Orr, Cady Panetta, Rhiannon Patterson, Rachel Stoiko, Frank Todisco, Weigle Hannah, Adam Wendel Over the past 20 years, corporate restructurings, particularly mergers and acquisitions (M&A) tended to happen more frequently during periods of economic expansion. GAO's analysis found that from 1999 through 2018, M&A activity comprised the largest share of corporate restructurings. In terms of dollar value of completed deals, M&A...

July 26, 2019
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26Jul

Individual Retirement Accounts: Formalizing Labor’s and IRS’s Collaborative Efforts Could Strengthen Oversight of Prohibited Transactions

By Jay McTigue, Charles A. Jeszeck, MaryLynn Sergent, David Lehrer, Ted Burik, Susan Chin, Steven Flint, Emily Gruenwald, Mark Kehoe Mark Kehoe, Jungjin Park, David Reed, James Bennett, Amy Bowser, Jacqueline Chapin The Department of Labor (DOL) has a process to grant administrative exemptions for individual retirement account (IRA) transactions that would otherwise be prohibited by law, such as an IRA buying investment property from the IRA owner. DOL evaluates applications using statutory criteria and follows administrative procedures codified...

July 26, 2019
Articles, Pension design, Regulation, Supervision, System Sustainability, , , ,
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26Jul

Individual Retirement Accounts: Formalizing Labor's and IRS's Collaborative Efforts Could Strengthen Oversight of Prohibited Transactions

By Jay McTigue, Charles A. Jeszeck, MaryLynn Sergent, David Lehrer, Ted Burik, Susan Chin, Steven Flint, Emily Gruenwald, Mark Kehoe Mark Kehoe, Jungjin Park, David Reed, James Bennett, Amy Bowser, Jacqueline Chapin The Department of Labor (DOL) has a process to grant administrative exemptions for individual retirement account (IRA) transactions that would otherwise be prohibited by law, such as an IRA buying investment property from the IRA owner. DOL evaluates applications using statutory criteria and follows administrative procedures codified...

July 26, 2019
Articles, Pension design, Regulation, Supervision, System Sustainability, , , ,
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19Jul

Longevity: a new asset class

By David Blake A little over a decade ago, a new asset classemerged, one linked to longe vity risk, i.e., unanticipatedchanges in life expectancy. The Life Market has two seg-ments: a macro-segment with assets linked to groups of lives,such as members of a pension plan or a book of annuitants;and a micro-segment with assets linked to individual lives,such as life settlements. For the market to become global,certain market requirements need to be satisfied, such asunderstanding the causal factors underlying...

July 19, 2019
Articles, Investing, Pension design, Savings,
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19Jul

Selecting a Social Security Age to Balance Consumption and Risk

By Barry Cobb, Jeffrey Smith This paper uses Monte Carlo simulation to determine the maximum consumption given retirement at age 62, initial wealth, risk tolerance, and Social Security take decision. Coile et al. (2002) argue for a delay, because the payment increases 7% for each year. Focusing on maximizing the expected present value of benefits may be misguided. This paper shows that, conditional on retirement at age 62, initial consumption is always maximized by taking Social Security no later...

July 19, 2019
Aging, Articles, Savings, ,
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Navigating Complex Financial Decisions at Retirement: Evidence from Annuity Choices in Public Sector Pensions

By Robert L. Clark, Robert G. Hammond, David Vanderweide Choices regarding the disposition of wealth at retirement can have substantial implications for retirement income security. We analyze the factors determining annuity option choices offered by a public sector defined pension plan with no default annuity option. Using combined administrative records and survey data, we explore the role of individual and household characteristics as well as risk preferences, time preferences, and financial literacy. The evidence is consistent with predictions over which...

July 19, 2019
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12Jul

The Evolution of Retirement Incentives in the U.S.

By Courtney Coile Program Employment rates of older men and women in the U.S. have been rising for the past several decades. Over the same period, there have been significant changes in Social Security and private pensions, which may have contributed to this trend. In this study, we examine how the financial incentive to work at older ages has evolved since 1980 as a result of changes in Social Security and private pensions. We find that the implicit tax on...

July 12, 2019
Articles, Labor Market,
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12Jul

Must an Occupational Pension Scheme Take Into Account ESG Factors Even If There Is a Risk of Financial Detriment to the Pension Fund?

By Philip Bennett This paper outlines the legal rules that regulate the investment of the assets of an English law occupational pension scheme set up under trust where the investment powers over those assets are held by the scheme trustee. Those rules derive from a combination of EU Directives (in particular, Article 18 of Directive 2003/41/EC (the “IORP I Directive”) replaced by Article 19 of Directive 2016/2341 (the “IORP II Directive”)), UK legislation transposing those Directives and adding further...

July 12, 2019
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12Jul

Digitalization and the Future of Work: Macroeconomic Consequences

By Melanie Arntz, Terry Gregory, Ulrich Zierahn Computing power continues to grow at an enormous rate. Simultaneously, more and better data is increasingly available and Machine Learning methods have seen significant breakthroughs in the recent past. All this pushes further the boundary of what machines can do. Nowadays increasingly complex tasks are automatable at a precision which seemed infeasible only few years ago. The examples range from voice and image recognition, playing Go, to self-driving vehicles. Machines are able...

July 12, 2019
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