June 2017
18Jun

In-Kind Infrastructure Investments by Public Pensions: The Queensland Motorways Case Study

By Michael Bennon, Ashby H. B. Monk & YJ Cho (Stanford University) OECD countries require billions in infrastructure investment for new projects and the rehabilitation of old assets. Public pensions are likewise underfunded and in need of stable, inflation-linked investment opportunities uncorrelated with the rest of their portfolio, making infrastructure a seemingly strong fit. This has led to calls to facilitate more direct investment by public pension funds in infrastructure. In truth there are many impediments to such programs. Under...

June 18, 2017
Articles, Corporate Governance, Investing, Savings,
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04Jun

Annuities and Retirement Income Planning

By Patrick J. Collins (Schultz Collins) This CFA Institute Research Foundation brief provides a broad-brush survey of the US annuity marketplace as of the end of 2014. It is a short and generic introduction to currently available annuity contracts. It is oriented toward both investors who are contemplating the use of annuities to generate income and hedge longevity risk and their advisers. It does not discuss the literature that evaluates annuities as instruments to enhance utility in the context of...

June 4, 2017
Aging, Articles, Investing,
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May 2017

24May

The Evolution of ESMA and Direct Supervision: Are there Implications for EU Supervisory Governance?

By Elizabeth Howell (University of Cambridge) The European Securities and Markets Authority (‘ESMA’) was established over six years ago. It, and its sibling bodies for banking, and the insurance and occupational pensions sector, emerged from the ashes of the crises, and the agencies have been the topic of much discussion in academic scholarship from a variety of perspectives. This article provides a new situating of ESMA within the broader policy context. Employing empirical observations, and rooting it within the related...

May 24, 2017
Articles, Investing, Regulation, Supervision, ,
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April 2017

03Apr

Financial History: Lessons of the Past for Reformers of the Present

By Gerard Caprio Jr. (Williams College) & Dimitri Vittas (World Bank) The environment in which financial institutions operate has changed greatly, but the history of financial development offers important lessons for today. Among the lessons financial history offers: Macroeconomic stability - low inflation and sound public finance - is important for creating the right incentives for banks and for facilitating the development of securities markets. High inflation and large fiscal deficits distort economic behavior in favor of short-term speculative projects and...

April 3, 2017
Articles, Investing, Regulation, Savings, , ,
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March 2017
17Mar

Understanding the Determinants of Financial Outcomes and Choices: The Role of Noncognitive Abilities

By Gianpaolo Parise (Bank for International Settlements) & Kim Peijnenburg (Netspar) We explore how financial distress and choices are affected by non cognitive abilities. Our measures stem from research in psychology and economics. In a representative panel of households, we find people in the bottom decile of non cognitive abilities are five times more likely to experience financial distress compared to those in the top decile. (more…)

March 17, 2017
Articles, Investing, Labor Market, Savings, ,
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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

05Feb

Employee Saving and Investment Decisions in Defined Contribution Pension Plans: Survey Evidence from the UK

By Alistair Byrne This paper uses data from a survey of the members of a UK defined contribution pension plan to explore the attitudes and knowledge of employees faced with pension saving and investment decisions. The results are consistent with behavioural economics in that many employees show limited interest in their pension arrangements. Not all members have received advice about their pension, but those who have are more likely to have calculated their savings needs, to have higher levels of...

February 5, 2017
Articles, Investing, Labor Market, Savings,
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04Feb

Welfare and Generational Equity in Sustainable Unfunded Pension Systems

By Alan J. Auerbach & Ronald Lee We evaluate several actual and hypothetical sustainable PAYGO pension structures, including: (1) versions of the US Social Security system with annual adjustments of taxes or benefits to maintain fiscal balance; (2) Sweden's Notional Defined Contribution system and several variants developed to improve fiscal stability; and (3) the German system, which also includes annual adjustments to maintain fiscal balance. For each system, we present descriptive measures of uncertainty in representative outcomes for a typical...

February 4, 2017
Articles, Investing, Savings, System Sustainability,
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04Feb

Do Financial Advisers Influence Savings Behavior?

By Jeremy Burke & Angela A. Hung There is substantial evidence that Americans tend to have low financial literacy (Lusardi and Mitchell, 2013) and are struggling with building sufficient wealth for a secure retirement (Helman et al., 2014). Financial advisers can play an important role by helping individuals make better financial decisions and improving their financial situations. However, there is limited and mixed evidence about the benefits to using a financial adviser. For example, as summarized in Burke et al....

February 4, 2017
Books, Investing, Labor Market, Savings,
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04Feb

What You Don’t Know Can’t Help You: Pension Knowledge and Retirement Decision-Making

By Sewin Chan & Ann Huff Stevens This paper provides an answer to an important empirical puzzle in the retirement literature: while most people know little about their own pension plans, retirement behavior is strongly affected by pension incentives. We combine administrative and self-reported pension data to measure the retirement response to actual and perceived financial incentives and document an important role for self-reported pension data in determining retirement behavior. Well-informed individuals are far more responsive to pension incentives than...

February 4, 2017
Articles, Investing, Labor Market, Savings, , ,
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