July 2020

28Jul

US. DOL’S ESG proposal would hurt retirement accounts

The Department of Labor lost an opportunity to encourage investors to support causes that they hold close to their hearts with a proposed rule regarding the investment choices they’re allowed in their retirement accounts. It’s a proposal that also could end up damaging Americans’ retirement security long-term if allowed to become part of the Employee Retirement Income Security Act. The June 23 proposal reaffirmed standard thoughts on fiduciary responsibilities that suggest only financial risk and returns can be considered...

July 28, 2020
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27Jul

Gig and older workers need to take control of their retirement

Several retirement trends have been brought into focus by the COVID-19 pandemic. One of the most disturbing is the number of workers between 50 and 65 who are in jobs without retirement benefits. Today half of all workers don’t have access to a work sponsored retirement plan. Read also US. DOL’S ESG proposal would hurt retirement accounts According to a recent study by Alicia H. Munnell and her colleagues at the Center for Retirement Research at Boston College, one-fifth of...

July 27, 2020
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24Jul

US. COVID-19 Underscores Need to Address Retirement Savings Gaps

Addressing the 2020 NAPA D.C. Fly-In Forum this week, two members of the House Ways & Means Committee shared their thoughts on how the economic stress caused by the pandemic has shined a spotlight on the need to better align retirement savings incentives. “I actually believe, long term, the biggest issue for the United States is retirement security,” noted Rep. David Schweikert (R-AZ). “If you look at the U.S. demographics, we have so many of our Baby Boom...

July 24, 2020
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22Jul

US considers restricting ESG in pensions

The US Department of Labor (DOL) is considering imposing strict rules on how pension funds invest, which could see the scope for ethical and responsible investing limited. The DOL has proposed an amendment to the Employee Retirement Income Security Act 1974 (ERISA) "to confirm that ERISA requires plan fiduciaries to select investments and investment courses of action based solely on financial considerations relevant to the risk adjusted economic value of a particular investment or investment course of action." The...

July 22, 2020
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21Jul

US. What The Wild Stock Market Means For Public Pensions

As governments deal with paying for Covid-19 expenses amid falling tax revenue and shrinking budgets, there’s another big bill waiting for them: pension debt. And many could lean on taxpayers to help. Pension plans haven’t released their annual earnings yet, but a recent report from Moody’s Investors Service notes that “investment returns...have almost certainly fallen well short of targets.” The ratings agency estimates that when pension plans tally up their total performance between July 1, 2019 and June...

July 21, 2020
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17Jul

Does the actuarial adjustment for pension delay affect retirement and claiming decisions?

By Devon Gorry, Kyung Min Lee, Sita Slavov We investigate the impact of more generous terms for delaying state pensions on claiming and labor supply in the United Kingdom using a 2005 policy change. First, we find that the more generous delay terms reduced the fraction of males receiving pensions at the earliest eligibility age and shortly after. While there are also post-policy changes in women’s claiming behavior, further investigation reveals that these changes do not coincide with the...

July 17, 2020
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17Jul

Exposure to the COVID-19 Stock Market Crash and its Effect on Household Expectations

By Tobin Hanspal, Annika Weber, Johannes Wohlfart We survey a representative sample of US households to study how exposure to the COVID-19 stock market crash affects expectations and planned behavior. Wealth shocks are associated with upward adjustments of expectations about retirement age, desired working hours, and household debt, but have only small effects on expected spending. We provide correlational and experimental evidence that beliefs about the duration of the stock market recovery shape households’ expectations about their own wealth and...

July 17, 2020
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17Jul

US. Public Pensions Face a COVID-19 Conundrum

Faced with depleting assets, and with state and local governments under fiscal pressure from the COVID-19 recession, public pension plan sponsors have some tough choices ahead of them in order to remain sustainable during economic uncertainty. However, there are widely differing views among economic scholars as to what the most prudent strategy is for state and local governments dealing with low returns on pension investments, aging workforces, and pressure to build portfolios to cover promised future benefits—as well as...

July 17, 2020
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16Jul

US. DOL Proposes New Rules for Selecting Retirement Plan Investments

If you are a member of the committee for your employer’s pension, 401(k), profit-sharing, or 403(b) plan, you should check out a set of proposed rules for selecting investments. If you have an outside investment advisor, as you probably should, they should be bringing these proposals to your attention. This process of the DOL’s presents a good opportunity to look at your plan’s procedures to assure that you and your advisor are both meeting your fiduciary responsibilities. The Notice...

July 16, 2020
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15Jul

US. Post-pandemic Retirement: Can We Build More Resilient Systems?

Reforming retirement systems is a more urgent imperative globally as the coronavirus pandemic claims jobs, lowers economic growth and investment returns, and threatens to choke funding for already underfunded pension plans. The pandemic is also hastening the imminent insolvency of the Social Security Trust Fund in the U.S., a recent report by the Penn Wharton Budget Model has found. In two recession scenarios the report laid out, the trust fund would run out of money in 2032 or 2034...

July 15, 2020
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