August 2017

08Aug

A Lost Generation but Renewed Hope: Oregon's Pension Crisis and the Road to Reform

By Scott Andrew Shepard (Independent) Like a number of other states, Oregon has been hampered in its pension reform efforts since 1996 by its state supreme court’s embrace of the “California Rule,” a doctrine arising, in Oregon’s case, from a misunderstanding of federal Contract Clause precedent. Under the misreading, states such as Oregon have been restricted from reducing pension benefits for government employees once they have been hired, even for work that lies in the future and may not be...

August 8, 2017
Articles, Regulation, Slider-Left, Supervision, System Sustainability,
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06Aug

Do Stereotypes About Older Workers Change? Evidence from a Panel Study Among Employers

By Hendrik P. van Dalen (Tilburg University) & Kene Henkens (Netherlands Interdisciplinary Demographic Institute) Background: Stereotypies of older workers and their productive value are believed to contrast with their actual potential. Still, these stereotypes among employers persist. Objective: This article examines whether managers have changed their views on older workers and if so what the driving forces are of these changes. Methods: Using panel data we examine the changes in attitudes among Dutch managers about the productive skills of older workers (50...

August 6, 2017
Aging, Articles, Labor Market
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06Aug

The Role of Self-Control on Retirement Preparedness of US Households

By Kyoung Tae Kim (University of Alabama), Jae Min Lee (Minnesota State University) & Eunice O. Hong (Sungshin Women's University) We examine the self-control problems of U.S households and their effects on households’ retirement preparedness based on the Behavioral Life-Cycle Hypothesis. Using the 2010 Survey of Consumer Finances dataset, the level of retirement adequacy was estimated with income replacement ratio (IRR), and only 42% of households were adequately prepared for retirement. Results from logistic regression analysis indicated that households with...

August 6, 2017
Aging, Articles, Pension design, Savings, Slider-Left,
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06Aug

How Do Local Labor Markets Affect Retirement?

By Leora Friedberg (University of Virginia), Michael Owyang (Federal Reserve Bank of St. Louis), Wei Sun (Renmin University of China) & Anthony Webb (Boston College) Compared with prime-age workers, older workers face an easier path out of the labor force if they lose their jobs during a recession. However, premature job exits or earnings losses in the years leading up to retirement may be particularly devastating to retirement savings. The authors analyze the impact of recent business cycles on retirement...

August 6, 2017
Articles, Labor Market, Savings
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July 2017

30Jul

Pension Funds, Capital Markets, and the Power of Diversification

By Fiona Stewart & Inna Remizova (World Bank); Romain Despalins (OECD) The potential for pension funds to contribute to capital markets and thereby economic growth has been argued on a theoretical basis and demonstrated empirically. However, reforms fostering the development of funded pension systems have not had the economic impact hoped for in some countries. Pension fund portfolios in some cases have remained highly exposed to shorter-term assets, such as bank deposits and shorter-term government bonds. This, in turn, has led to relatively...

July 30, 2017
Articles, Investing, Pension design,
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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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30Jul

Pension Funds and the Impact of Switching Regulation on Long-Term Investment

By Alvaro Pedraza & Fiona Stewart (World Bank); Olga Fuentes & Pamela Searle (Superintendencia de Pensiones) This paper looks at the impact of members' ability to switch pension fund provider and/or portfolio on the allocation of pension funds to long-term investments. The level of annual turnover in pension fund portfolios was compared with the amount of short-term investments (using government treasury bills and bank deposits as proxy). The investment regulations around switching and other market conduct were then considered. The...

July 30, 2017
Articles, Investing, Regulation,
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23Jul

The Evolution of Social Security Research

By Mario Arturo Ruiz Estrada (University of Malaya) & Evangelos Koutronas (Social Security Research Centre) This article examines the evolution of social security research from a theoretical and empirical perspective. This is done through an extensive review and analysis of publications from the Journal of International Social Security Review published by Wiley within a 50-year period (1967-2017). It was observed that at a different period in time, the social security research focused on different national and international issues that invoked...

July 23, 2017
Adequacy, Articles, Regulation,
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23Jul

Life-Cycle Earnings Curves and Safe Savings Rates

By Derek Tharp (Kansas State University) & Michael E. Kitces (The Kitces Report & Nerd's Eye View) Traditional analyses of recommended savings ratios and safe savings rates (SSRs) typically assume constant real earnings growth throughout the one’s career. However, data on the life-cycle earnings patterns of millions of U.S. workers suggests that earnings growth does not occur at a constant rate that matches inflation. Instead, earnings tend to increase at a decreasing rate during the early years of one’s career...

July 23, 2017
Aging, Articles, Labor Market, Savings,
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23Jul

Retirement Security in an Aging Society

By James M. Poterba The share of the U.S. population over the age of 65 was 8.1 percent in 1950, 12.4 percent in 2000, and is projected to reach 20.9 percent by 2050. The percent over 85 is projected to more than double from current levels, reaching 4.2 percent by mid-century. The aging of the U.S. population makes issues of retirement security increasingly important. Elderly individuals exhibit wide disparities in their sources of income. For those in the bottom half of...

July 23, 2017
Aging, Articles, Investing, Savings, , ,
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