February 2017

04Feb

The ‘Crisis’ in Defined Benefit Corporate Pension Liabilities: Current Solutions and Future Prospects

By Gordon L. Clark & Ashby H. B. Monk Once an integral component of company-sponsored compensation schemes in many western economies, private defined benefit (DB) pensions are in decline. For many, DB schemes (and their related health care liabilities, depending on the jurisdiction) have hobbled the financial well-being of plan sponsors and even whole sectors of industry. If a constraint on shareholder value in the short-term, these schemes threaten long-term corporate survival in the emerging global economy. While there remains considerable debate...

February 4, 2017
Articles, Investing, Labor Market, ,
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04Feb

The 'Crisis' in Defined Benefit Corporate Pension Liabilities: Current Solutions and Future Prospects

By Gordon L. Clark & Ashby H. B. Monk Once an integral component of company-sponsored compensation schemes in many western economies, private defined benefit (DB) pensions are in decline. For many, DB schemes (and their related health care liabilities, depending on the jurisdiction) have hobbled the financial well-being of plan sponsors and even whole sectors of industry. If a constraint on shareholder value in the short-term, these schemes threaten long-term corporate survival in the emerging global economy. While there remains considerable debate...

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

Is Asia Prepared for an Aging Population?

By Peter Heller Many Asian countries (such as China, Singapore, Korea, Thailand, Malaysia, Indonesia, India, and the Philippines) will experience a significant aging of their populations during the next several decades. This paper explores how these aging Asian countries are addressing and anticipating the challenges of an aging society. It suggests that Asia's preparedness for an aging population is decidedly mixed. While growth policies have been successful, much work is still needed in many countries to establish an adequate and...

February 4, 2017
Aging, Articles, Labor Market, ,
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04Feb

The Future of Labor and Employment Law in the United States

By Katherine V.W. Stone There is a serious problem with the labor and employment law system in the United States today: Unions have declined to the point where they represent less than 8 per cent of the private sector workforce, employee wages have stagnated for more than three decades, employers are cutting back on workers' health insurance and pensions, and there is a dramatic growth in the numbers of the working poor. At the same time, there has been a...

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

The Effect of Workplace Pensions on Household Saving: Evidence from a Natural Experiment in Taiwan

By Tzu-Ting Yang Population aging causes financial imbalance in pay-as-you-go public pension programs.To remedy this problem while ensuring the adequacy of retirement savings for employees, many countries complement or substitute for public pensions by regulating workplace pensions. This paper exploits a pension reform in Taiwan that has mandated, since 2005, that all private-sector employers contribute at least 6% of wages to employees' individual pension accounts monthly. I use the workers in the unaffected sector as a comparison group and employ...

February 4, 2017
Aging, Articles, Labor Market, Regulation,
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04Feb

Security of Retirement Benefits in Canada: You Bet Your Life?

By Ronald B. Davis This paper provides a careful review and analysis of employment-based pensions and other post-retirement benefits that may be available to Canadian workers when they retire, with particular emphasis on the extent to which such benefits are vulnerable to unilateral employer alteration or cancellation, and to the risks which arise in the event of the employer's insolvency.  Taking stock of key differences between the rights of unionized employees and non-unionized ones, the author argues that the legal...

February 4, 2017
Adequacy, Articles, Labor Market, Regulation,
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04Feb

Sustainability of Pension Systems in Europe – The Demographic Challenge

By Chris Daykin Fiscal sustainability of pensions is a serious issue in Europe because of the ageing of the population but there is also concern that reformed pensions may not be adequate. Actuaries have always been seen as major players in employer-sponsored pension schemes and insured pensions but have often not been very visible in commenting on public policy issues concerning the pension system as a whole. This article introduces the work being done by the Actuarial Association of Europe...

February 4, 2017
Aging, Articles, Labor Market,
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04Feb

Borrowing from the Future: 401(k) Plan Loans and Loan Defaults

By Timothy (Jun) Lu, Olivia S. Mitchell, Stephen P. Utkus & Jean A. Young Tax-qualified retirement plans seek to promote saving for retirement, yet most employers permit pre-retirement access by letting 401(k) participants borrow plan assets. This paper examines who borrows and why, and who defaults on their loans. Our administrative dataset tracks several hundred plans over 5 years, showing that 20% borrow at any given time, and almost 40% do at some point over five years. Employer policies influence...

February 4, 2017
Labor Market, Savings,
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04Feb

Assessing the Distortions of Mandatory Pensions on Labor Supply Decisions and Human Capital Accumulation: How to Bridge the Gap between Economic Theory and Policy Analysis

By Mukul Rutkowski, David A. Robalino & Andras Bodor Mandatory pension systems play a major role in individual savings and labor supply decisions. In particular, it is well known that defined benefit pension schemes, which are not actuarially fair, can create incentives for early retirement and therefore reduce labor supply and the stock of human capital in a given country. This is an important policy issue in middle-income countries, with still low participation rates in the labor force, where the...

February 4, 2017
Adequacy, Articles, Labor Market, ,
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