nep-age New Economics Papers
on Economics of Ageing
Issue of 2007‒07‒27
three papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Aging, Saving, and Public Pensions in Japan By Charles Yuji Horioka; Wataru Suzuki; Tatsuo Hatta
  2. Liability without control: The curious case of pension income splitting By Frances Woolly
  3. Pension Plan Characteristics and Framing Effects in Employee Savings Behavior By David Card; Michael Ransom

  1. By: Charles Yuji Horioka; Wataru Suzuki; Tatsuo Hatta
    Abstract: We analyze the impact of population aging on Japan's household saving rate and on its public pension system and the impact of that system on Japan's household saving rate and obtain the following results: first, the age structure of Japan's population can explain the level of, and past and future trends in, its household saving rate; second, the rapid aging of Japan's population is causing Japan's household saving rate to decline and this decline can be expected to continue; third, the pay-as-you-go nature of the public pension system, combined with rapid population aging, created considerable intergenerational inequities and increased the saving rates of cohorts born after 1965, which in turn slowed the decline in Japan's household saving rate; and fourth, the 2004 public pension reform alleviated the intergenerational inequities of Japan's public pension system somewhat but will in the long run exacerbate the downward trend in Japan's household saving rate.
    JEL: D12 D91 E21 E24 H55 J11
    Date: 2007–07
  2. By: Frances Woolly (Department of Economics, Carleton University)
    Abstract: Canadian pensioners are now allowed to split income from an employer pension and, for people 65 and older, income from a registered retirement income fund, RRSP annuity and some other forms of annuitites. In this commentary I argue that pension income splitting has no efficiency benefits, while involveing significant revenue sacrifices.
    Date: 2007–07–01
  3. By: David Card; Michael Ransom
    Abstract: In this paper we document the importance of framing effects in the retirement savings decisions of college professors. Pensions in many post-secondary institutions are funded by a combination of an employer contribution and a mandatory employee contribution. Employees can also make tax-deferred contributions to a supplemental savings account. A standard lifecycle savings model predicts a "dollar-for-dollar" tradeoff between supplemental savings and the combined regular pension contributions made on behalf of an employee. Contrary to this prediction, we estimate that each additional dollar of employee contributions leads to a 70 cent reduction in supplemental savings, whereas each dollar of employer contributions generates only a 30 cent reduction. The asymmetry - which is consistent with different "mental accounts" for employer and employee contributions - provides further evidence of the sensitivity of individual savings decisions to the precise details of their pension plan.
    JEL: D91 G23 J26
    Date: 2007–07

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