January 2025
31Jan

Financial Inclusion Across the United States

By Motohiro Yogo, Andrew Whitten & Natalie Cox We study retirement and bank account participation for the universe of U.S. households with a member aged 50 to 59 in the administrative tax data. ZCTA-level average income, income inequality, and racial composition predict retirement account participation for low-income households, conditional on household income and regional price parities. Income inequality also predicts bank account participation for low-income households. We estimate the causal effect of access to an employer retirement plan on participation. Recent policy proposals...

January 31, 2025
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24Jan

Australia. Avoiding the retirement poverty trap

More than one fifth of Australian retirees live in poverty, according to a recent report by the left-leaning think-tank, The Australia Institute. The Reducing poverty in retirement report compares the poverty rate of people aged 65 and over between Australia, Sweden, and Norway, which are nations with comparable GDPs. It concludes that the public pension systems in Sweden and Norway ensure retirement security while Australia’s system does not. The rate of poverty in retirement in Australia is 22.6% – more than one in five. In...

January 24, 2025
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17Jan

Adequacy of future retirement incomes: new evidence for private sector employees

By Jonathan Cribb, Laurence O'Brien & David Sturrock This report takes a fresh look at the prospects for the future of retirement incomes for employees in the UK. Since the Pensions Commission reported around 20 years ago, much has changed in the economic and pensions policy environment. While the introduction of automatic enrolment has been in many respects a great policy success – and the level and coverage of the flat-rate component of the state pension have increased markedly – lower-than-expected...

January 17, 2025
Adequacy, Books, Books, Reports, , ,
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17Jan

Pension reform and wealth inequality: Theory and evidence

By Torben M. Andersen, Joydeep Bhattacharya, Anna Grodecka-Messi & Katja Mann A growing literature explores reasons for rising wealth inequality, but is mostly silent on the role of pension systems despite their well-understood influence on life-cycle savings. This paper develops a simple life-cycle model to lay bare the primary theoretical mechanisms connecting pension systems, asset accumulation, and the wealth distribution. Mandated fully-funded plans transform individuals with lower incomes, often characterized as low savers, into asset owners, and may also imply...

January 17, 2025
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10Jan

Collective Bargaining, Unions, and the Wage Structure: An International Perspective

By Simon Jäger, Suresh Naidu & Benjamin Schoefer In this paper, we assess the recent economics literature on collective bargaining. Despite a declining trend in the OECD in coverage and especially union membership, a large share of formal workers around the world are still covered by collective bargaining agreements. We describe the substantial institutional variation across a variety of countries, highlighting research done with modern research designs and recently available administrative datasets. We then estimate a canonical empirical model of individual-level coverage effects...

January 10, 2025
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December 2024
23Dec

‘Heartless’ multinationals exploiting pensions loophole for UK workers

Some of the world’s richest companies are accused of exploiting a loophole in pension law to freeze increases in payouts for many former UK employees, despite the cost of living crisis. The companies, which include Hewlett Packard Enterprise (HPE), American Express and Pfizer, are being urged to “do the right thing” and increase these frozen pension payouts in line with inflation. MPs have condemned the failure of companies to increase the payments in the face of high inflation in recent years as...

December 23, 2024
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23Dec

Spain To Boost Pensions Significantly By 2025

Major reforms announced to address inflation and support vulnerable pensioners. Starting January 1, 2025, Spain will implement significant pension reforms ushering both structural changes and substantial increases aimed at enhancing the financial well-being of pensioners. These reforms are framed within the government's broader strategy to address economic inequalities and inflationary pressures affecting vulnerable populations.The Ministry of Inclusion, Social Security and Migration, led by Elma Saiz, confirmed the increments will affect both contributory and non-contributory pensions, marking one of the most...

December 23, 2024
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12Dec

Morningstar Drops Recommended Safe Withdrawal Rate to 3.7%

Morningstar Inc. has lowered what the investment research firm considers a safe retirement savings withdrawal rate for new retirees based on a 30-year outlook, according to the firm’s annual “State of Retirement Income” report released Wednesday. To decide on the recommended withdrawal rate, Morningstar researchers considered forward-looking asset class returns and inflation assumptions for new retirees, excluding what they may be getting from Social Security or other nonportfolio income sources such as a company pension. In that forward-looking analysis, the authors...

December 12, 2024
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11Dec

Rising Pension Poverty in Germany: A Growing Number Below Minimum Living Standards

The issue of pension poverty is increasingly prevalent in Germany, with a significant portion of the elderly population receiving pensions that fall below the established minimum living standard. Recent statistics reveal that the situation is worsening, as more seniors struggle to meet their basic needs. As of the end of 2023, the minimum living standard for pensioners, as defined by the basic security benefits in old age, was set at 942 euros per month. Approximately 7.9 million individuals in Germany...

December 11, 2024
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09Dec

How widening inequalities signal a warning for the UK pension system

The government has made a commitment to “tackle all the inequalities that pervade our society” in “a fairer Britain, where everyone lives well for longer”. But what does inequality mean for pensions and, ultimately, for living standards in later life? That’s the question that underpins a report we published last month. For many people, income inequality is the first thing that comes to mind when we talk about inequality in the UK, and for good reason. The UK has had higher income inequality...

December 9, 2024
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