October 2019

16Oct

Increasing Decision Making Capacities of Local Governments: Mexico’s Quest for Economic Growth

By Heidi Jane Smith (Economics Professor and Public Policy Coordinator, Department of Economics, Universidad Iberoamericana) This paper examines the relationship between fiscal autonomy and a municipalities’ commitment to and the impact upon economic development activities. This article evaluates quantitatively, using a panel dataset from 1989-2014, the relationship of fiscal capacity to a city’s economic development. It tests the hypothesis that if a municipality is more fiscally autonomous in collecting their own revenue and also discretion in making their...

October 16, 2019
Articles, Artículos, Sostenibilidad del Sistema, Sostenibilidad del Sistema, System Sustainability, , , ,
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11Oct

Defined Benefit Pension De-Risking and Corporate Investment Policy

By Brian Silverstein U.S. corporate sponsors of defined benefit pension plans in recent years have been de-risking by paying premiums to transfer their pension plan assets and liabilities to the balance sheets of third party insurers. The passage of the Moving Ahead for Progress in the 21st Century Act (MAP-21) in 2012 provided the pension funding relief necessary to make de-risking a mainstream corporate activity. This study provides the first empirical analysis of plan and firm factors that cause...

October 11, 2019
Articles, Investment, Pension design,
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11Oct

Tactical Target Date Funds

By Francisco Gomes, Alexander Michaelides, Yuxin Zhang We propose target date funds modified to exploit stock return predictability driven by the variance risk premium. The portfolio rule of these tactical target date funds (TTDFs) is extremely simplified relative to the optimal one, making it easy to implement and communicate to investors. We show that saving for retirement in TTDFs generates economically large welfare gains, even after we introduce turnover restrictions and transaction costs, and after taking into account parameter...

October 11, 2019
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11Oct

The Quest for Sustainability in Contingent Pension Plans

By Barry Gros, Barbara Sanders The types of pension plans offered to Canadian employees are changing. As membership in traditional defined-benefit pension plans declines, plans in which benefits are contingent on the financial status of the plan are becoming more common. Rather than placing all the risk on sponsors to deliver guaranteed benefits to members, these contingent pension plans require members to take on at least some of the risk that benefits may or may not meet expectations. At...

October 11, 2019
Adequacy, Articles, Sustainability, , ,
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04Oct

Retirement Policy and Annuity Market Equilibria: Evidence from Chile

By Gaston Illanes, Manisha Padi Retirement policy has indirect effects on its beneficiaries, through the “crowd-out” or “crowd-in” of insurance markets. We study how retirement policy in Chile, which limits the drawdown of retirement assets but otherwise does not provide or require fixed income in retirement, results in more than 60% of eligible retirees purchasing private annuities at low prices. We estimate a demand model to show that replacing this voluntary policy with partial mandatory annuitization and removing limits...

October 4, 2019
Articles, Pension design, ,
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04Oct

Computer As Confidant: Digital Investment Advice and the Fiduciary Standard

By Nicole G. Iannarone Digital investment advisers are the fastest growing segment of financial technology (fintech) and are disrupting traditional investment advisory delivery models. The computer-led investment advisory service model may be growing particularly quickly due to a confluence of social and political factors. Politicians and regulators have increasingly focused on the standards of care applicable to investment advice providers. Fewer Americans are ready for retirement and many lack access to affordable investment advice. At the same time, comfort...

October 4, 2019
Articles, Pension design, ,
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04Oct

Defined Benefit Pension De-Risking and Corporate Investment Policy

By Brian Silverstein U.S. corporate sponsors of defined benefit pension plans in recent years have been de-risking by paying premiums to transfer their pension plan assets and liabilities to the balance sheets of third party insurers. The passage of the Moving Ahead for Progress in the 21st Century Act (MAP-21) in 2012 provided the pension funding relief necessary to make de-risking a mainstream corporate activity. This study provides the first empirical analysis of plan and firm factors that cause...

October 4, 2019
Articles, Investment, ,
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September 2019

27Sep

Pensions and Early Retirement: The Case of The Public Servants in Uganda

By Kibs Boaz Muhanguzi Retirement, if influenced by pensions, can be a good manifestation of how the government can use the pension system as a fiscal instrument to achieve some socioeconomic targets. Borrowing intuition from the postulations of disengagement theory of aging that when the elderly retire, they free up positions in paid work for the entry of young individuals, this study investigates the role of incentives on early retirement. The high levels of unemployment in Uganda amidst the...

September 27, 2019
Articles, Pension design, System Sustainability, , , ,
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27Sep

Does Automatic Enrollment Increase Contributions to Supplement Retirement Programs by K-12 and University Employees?

By Robert L. Clark, Denis Pelletier This study examines the impact of the adoption of automatic enrollment provisions by schools and universities in the state of South Dakota for its supplemental retirement saving plan (SRP). In South Dakota, educational personnel are also covered by a defined benefit pension plan and by Social Security. Thus, career public employees in South Dakota can expect a life time annuity from these two programs of around 75 percent of their final salary. Prior...

September 27, 2019
Articles, Pension design, Savings, ,
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27Sep

Linking financial services and social protection for resilience: lessons from Kenya

Climate-related shocks and stresses threaten people and communities around the world, compounding existing poverty and vulnerability and undermining long-term development. National and international actors are searching for new and better ways to help people deal with increasing climate risks and, in turn, support long-term resilience. One potential way of doing this is to facilitate access to, and use of, adequate financial services such as savings, loans and insurance in underserved communities. The role of social protection (SP) programmes in helping...

September 27, 2019
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