March 2019

29Mar

Why ageing China won’t overtake the US economy as the world’s biggest – now or in the future

In 2010, China replaced Japan as the world's second-largest economy. Many economists believe it is just a matter of time before China dethrones the United States as the world’s biggest economy – some have argued that it could happen before 2030. They have cited the history of other Asian economies as evidence to back the claim. The nominal per capita gross domestic product of China was just a sixth of America’s in 2018 – a level similar to...

March 29, 2019
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28Mar

US. State Pensions Plans Are In Bad Shape But Reforms Can Help

It’s no secret that state public pension systems across the country are in bad shape. A failure to make required contributions coupled with unrealistic assumptions about investment returns has left many systems severely underfunded. A new report from the American Legislative Exchange Council (ALEC) examines state pension systems from a variety of angles and finds that the view is always the same—looking over a cliff. Any analysis of state pension systems needs to clearly establish a baseline. The ALEC...

March 28, 2019
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22Mar

401(k) managed accounts becoming more diverse

Some record keepers of defined-contribution retirement plans are diversifying the managed-account products they offer to employers and their employees in a bid to boost uptake and diversify their revenue streams in an environment of fee compression, according to experts. Empower Retirement is the most recent example. The record keeper — among the largest, with $590 billion in assets and more than 9 million participants — debuted its Advisor Managed Accounts product Mar. 20. Unlike a traditional managed account —...

March 22, 2019
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21Mar

The Retirement Crisis Is Much Worse Than You Think

Are you sitting down for this? According to a recent survey, one in five American adults have nothing saved for retirement or emergencies. A further 20 percent have squirreled away only 5 percent or less of their annual income to meet certain financial goals. Less than a third of all Americans have saved at least 11 percent or more. The survey, conducted by Bankrate in late February and early March, is just the latest indication that the U.S. faces...

March 21, 2019
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20Mar

US. It just became easier for employers to dump retirees’ pensions

Traditional pensions are disappearing in America, and the federal government just made it easier for employers to get rid of them. With no fanfare in early March, the Treasury Department issued a notice that allows employers to buy out current retirees from their pensions with a one-time lump sum payment. The decision reverses Obama-era guidance, issued in 2015, that had effectively banned the practice after officials determined that lump-sum payments often shortchanged seniors. Now, advocates for the elderly worry...

March 20, 2019
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19Mar

Only half of Americans have access to a 401(k)

Using a 401(k) plan to save for retirement is an attractive option: You get tax advantages, the funds are automatically taken out of your paycheck for you and sometimes your company even matches your contribution up to a certain amount, which is essentially free money. But many Americans don’t have access to this specific retirement tool. “Roughly half of all households are offered work-based retirement plans at their current jobs,” researchers at the Stanford Center on Longevity point out...

March 19, 2019
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19Mar

Pension Risk Transfer Volume Blows Past Forecasts

U.S. life insurers took over more pension responsibility than they might have expected in 2018. Full-year sales of group annuities used to transfer pension risk increased to about $26 billion in 2018, up 15% from the total for 2017, according to new issuer survey data from the LIMRA Secure Retirement Institute. In June, Wayne Daniel, head of U.S. pensions at MetLife, predicted pension plan sponsors might use group annuities to transfer about $20 billion in pension risk in 2018....

March 19, 2019
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18Mar

Public Pensions And Social Trust

So it seems that I hit the one-year mark of my writing on retirement at this platform, and have still not managed to address some of the topics I wanted to discuss, in particular, questions of what pensions look like abroad and what we can learn from them.  But right now I find myself thinking about international comparisons in another way, around the question of social trust. Round about a year ago, Megan McArdle, formerly a Bloomberg columnist and now writing at...

March 18, 2019
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17Mar

Defined Contribution Pension Plans: Who Has Seen the Risk?

By Peter Forsyth (University of Waterloo - David R. Cheriton School of Computer Science) & Kenneth R. Vetzal (University of Waterloo) The trend towards eliminating defined benefit (DB) pension plans in favor of defined contribution (DC) plans implies that increasing numbers of pension plan participants will bear the risk that final realized portfolio values may be insufficient to fund desired retirement cash flows. We compare the outcomes of various asset allocation strategies for a typical DC plan investor. The strategies...

March 17, 2019
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15Mar

Why Americans must rise to the challenge of an aging population

At dawn on his 62nd birthday in 1366, Petrarch started a letter to his friend Boccaccio. “When you feel that you are old,” the Italian humanist told his fellow writer, “then and no sooner will you declare your old age.” Why should we care about old age any more now than Petrarch did then? Demographics. Every day until 2030, about 10,000 Americans will turn 65. Between now and 2050, the number of Americans over 65 will double. By then,...

March 15, 2019
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