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| By: | Teresa Ghilarducci; Joelle Saad-Lessler; Michael Papadopoulos (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | New Yorkers need safe and convenient mechanisms to save for old age. Secure pension income helps strengthen the city's financial future by keeping social spending down and older residents' spending power up. However, fewer than half of New York residents have access to a retirement plan at work. Low and decreasing rates of employer sponsorship of retirement plans and the shift from traditional pension plans to 401(k)-type plans are threatening New Yorkers' financial readiness for retirement. |
| Keywords: | Retirement, 401(k), Sponsorship, New York City, City |
| JEL: | H55 J26 J32 D63 E21 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapb:2015-04&r=age |
| By: | Christopher T. Whelan (School of Sociology and Geary Institute for Public Policy, University College Dublin); Brian Nolan (Department of Social Policy and Intervention and Institute for New Economic Thinking at the Oxford Martin School, University of Oxford); Bertrand Maítre (Economic & Social Research Institute, Dublin) |
| Abstract: | The impact of the Great Recession led to changes in the distribution of economic stress across the life course in Ireland, one of the countries severely affected by the economic crisis. Our peak to trough analysis shows that in Ireland in 2008 there was a clear life course gradient in relation to economic stress with children occupying the most favourable and the elderly the least favourable position. Over time the gradient became sharper with the relative position of younger groups deteriorating. In 2008 life course differentiation was significantly sharper for the precarious and poverty classes than for the high income groups. For the former graduated differentiation across the range of the life course was evident while for the latter the primary contrast was between the elderly and all other stages. Thus the major line of differentiation in terms of both overall stress levels and their patterning across the life course was between the precarious and poor income classes and the high income group. While stress levels increased for all groups between 2008 and 2012, within the high income class the elderly group saw their relative position particularly enhanced while children experienced the sharpest deterioration. Among the precarious and poor classes, the elderly again experienced an improvement in their relative position while for the former the sharpest deterioration was experienced by the older middle aged group and for the latter the younger middle aged group. Thus while the elderly experienced a cross class improvement in their relative position for other life course stage the impact of the crisis was contingent on income class. That the Irish pattern of change was not an inevitable outcome of the economic crisis is illustrated by the fact that in Iceland a similar starting produced a quite different set of changes involving an erosion of life course differentials in the impact of precarity and poverty. Greece on the other hand provides an example of the emergence of life course differentiation where the pre-recession period was characterised by their absence. Clearly policy choices not only affect such differentiation but the extent to which they operate differentially across income cases. |
| Keywords: | Great Recession, income classes, economic stress, life course |
| Date: | 2016–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:201603&r=age |
| By: | Teresa Ghilarducci; Kyle Moore (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Proposals to reduce Social Security benefits collected before age 70 argue that Americans on average are living longer and should therefore work longer. But averages across racial groups hide crucial differences in quality of life, ability to work and longevity. While increasing the normal retirement age will make it more difficult for all Americans to experience a healthy and active retirement, Blacks will be disproportionately affected. For example, Blacks are more likely to develop adverse health conditions that limit their ability to work and to report declining health. The average black American will experience physical limitations before the normal retirement age of 67. |
| Keywords: | Retirement, 401(k), Pensions, Race, Morbidity |
| JEL: | H55 J26 J32 D63 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapn:2015-02&r=age |
| By: | Teresa Ghilarducci; Joelle Saad-Lessler; Kate Bahn (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Employer-sponsored retirement plans provide the best vehicle for retirement savings because they provide a practical and efficient way for workers to save consistently. However, this report finds that almost half of Americans who were working in 2011 were not offered a retirement account at work. In addition, 68% of the U.S. working age population (25-64) did not participate in an employer-sponsored retirement plan because their employer did not offer one, they elected not to participate or were not working. This report also finds the amounts saved through employer-sponsored defined contribution (DC) retirement plans are only slightly better off than those without a retirement plan. Except for those workers with defined benefit (DB) plans, most middle class U.S. workers will not have adequate retirement income. The poverty projections highlighted in this report reveal that 33% of future retirees will be either poor or near-poor when they retire. Additionally, 55% of retirees will be forced to rely solely on their Social Security income. A previous version of this report was published in the Journal of Pension Benefits. |
| Keywords: | Retirement, 401(k), Pensions |
| JEL: | H55 J26 J32 D63 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapb:2015-01&r=age |
| By: | Teresa Ghilarducci; Kyle Moore (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | In 1950, the United States could claim racial equity in one important respect – both black and white American men who reached age 65 could expect to live twelve more years to age 77. Unfortunately, by 2010, racial gaps appeared. White men at age 65 were projected to live almost 2 years longer than black men, while white women could expect to live one year longer than black women. In 60 years, racial equity turned into a racial gap in age-65 life expectancy. Th is is signifi cant when considering public policy proposals that seek to cut Social Security benefi ts by raising the retirement age, the age at which workers can collect their full Social Security benefi ts. A racial gap in life expectancy past the age of 65 means this cut in benefi ts will disproportionately impact Blacks. |
| Keywords: | Retirement, 401(k), Retirement, Social Security, race, Longevity |
| JEL: | H55 J26 J50 D63 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapn:2014-01&r=age |
| By: | Holzmann, Robert |
| Abstract: | This policy paper presents key findings and suggestions on Malaysia’s old-age financial protection system within the context of the country’s broader social security framework. The trademark policy approach focusing on job creation instead of expanding social security programs served the country well to move it quickly to a high-middle income level. But to join the club of high-income countries in a sustainable manner may require the country to review its approach to social security, including the way old-age income support is provided, and to address the main current weaknesses: fragmentation across economic sectors, lack of an enabling political environment, incomplete benefit coverage, low mandated savings level, and inadequate disbursement options given the challenges of projected population aging and socioeconomic shifts. To address the old-age financial protection challenge, the paper outlines two key options for Malaysia's employees provident fund, the country's central pension pillar: (i) moving from a mere retirement savings investment fund to a fully-fledged pension fund that offers some minimum annuities; or (ii) more radically, moving the benefits toward a non-financial defined contribution scheme with the fund’s resources used as its major reserve fund. Whatever approach is considered, the reform discourse will benefit from changes in the overall governance structure of social security and from a comprehensive research agenda that offers an evidence based decision making. |
| Date: | 2014–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:92725&r=age |
| By: | Richard Blundell (University College London and Institute for Fiscal Studies); Rowena Crawford (Institute for Fiscal Studies); Eric French (University College London and Institute for Fiscal Studies); Gemma Tetlow (University College London and Institute for Fiscal Studies) |
| Abstract: | We use comparable data from the U.S. and England to examine similarities and differences in the level and trajectories of assets among households age 70 and older. We find that in the U.S. assets on average decline gradually with age, while in England older households actually accumulate wealth. These differences appear to be driven largely, though not entirely, by housing wealth: During the period we consider, house price growth drove increases in housing wealth in England that more than offset the slow drawdown of nonhousing wealth. This suggests the illiquid nature of housing is likely to be an important factor in explaining wealth drawdown at older ages. We also consider the potential importance of bequest motives and savings to insure against the risk of medical and long-term care expenses. |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp333&r=age |
| By: | Teresa Ghilarducci; Joelle Saad-Lessler; Kate Bahn (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | This report, conducted at the request of New York City Comptroller Scott Stringer, reveals a 17% drop (from 49% to 41%) between 2001 and 2011 in the percentage of New York City workers participating in a retirement plan at work. Only 12% of New Yorkers had a defined benefit (DB) plan. The DB plan guarantees a pension, whereas defined contribution (DC) plans such as 401(k)s and IRAs do not. As a result, those with DB plans maintained an average income replacement rate of 90% versus those with DC plans who had an average replacement rate of 48%. The consequences of declining employer-sponsored plans and low replacement rates threaten workers' standard of living in retirement and could increase poverty levels among the city's older residents. |
| Keywords: | Retirement, Social Security, New York City |
| JEL: | J26 H55 E21 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapb:2014-03&r=age |
| By: | Teresa Ghilarducci; Zachary Knauss; Bridget Fisher (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Despite billions in tax breaks to incentivize retirement savings, almost half of the American workforce does not have a retirement plan. Without safe, effective accounts to save consistently for retirement, older workers face the increasing likelihood of experiencing downward mobility in retirement. Rather than relying on families and social spending to provide for the growing numbers of vulnerable seniors, we need comprehensive retirement reform to ensure retirement income security. This includes creation of Guaranteed Retirement Accounts (GRAs) added on to Social Security. A GRA is a mandated, professionally-managed retirement account – a hybrid between a defined benefit pension and a 401(k)-type defined contribution plan. |
| Keywords: | Retirement, 401(k), GRA, Social Security |
| JEL: | H55 J26 J32 D63 E21 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapn:2015-07&r=age |
| By: | Marie-Louise Leroux; Dario Maldonado; Pierre Pestieau |
| Abstract: | We consider a political economy model in which agents have the possibility to hide part of their earnings in order to avoid taxation. Taxation is exclusively used to finance a pension system. If the pension system is implemented, agents in their old age receive a benefit which includes both a Bismarkian and a Beveridgian component. We show that in the absence of compliance costs, agents are indifferent to the tax rate level as in response, they can perfectly adapt their level of compliance. The public pension system is found to be at least partially contributory in order to increase compliance and thus to increase the tax base. When compliance costs are introduced, perfect substitutability between compliance and taxation breaks down. Depending on the relative returns from public pensions and private savings as well as on the elasticity of compliance to income, we obtain that the preferred tax rate should be increasing or decreasing in income. The majority voting tax rate is more likely to be positive when the median income is low and when the return from public pensions dominates that of private savings. The level of the Bismarkian pillar will now be chosen so as to account for increased political support, for increased direct redistribution toward the worst-off agent, and increased tax base. |
| Keywords: | Compliance costs, Majority Voting, Public Pensions, Tax Evasion |
| JEL: | H55 I13 D91 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:criacr:1519&r=age |
| By: | Teresa Ghilarducci; Kyle Moore (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Advocates for raising the retirement age to 70 and beyond argue that since the "average" American is living longer, lifetime benefits are actually increasing. However, black seniors die sooner and are sick for a longer period of time than white seniors. This means that any policy to cut Social Security benefits by raising the normal retirement age will have a disparate and negative impact on Blacks. This study examines the size and growth of racial gaps in mortality and morbidity, and shows that while some groups have experienced lifetime benefit increases, others have not. |
| Keywords: | Retirement, Social Security, Race, Inequality |
| JEL: | H55 J26 J32 D63 E21 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepawp:2015-03&r=age |
| By: | Teresa Ghilarducci; Bridget Fisher; Kyle Moore (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Foreign-born Hispanic men can expect to live 3.2 years longer than their U.S.-born counterparts. As successive generations of Hispanic-Americans are born in the U.S., the longevity advantage attributed to the Hispanic-American population will likely disappear and their health outcomes will begin to approach what would be expected given their relatively low socioeconomic status. Proposals to raise the retirement age must anticipate this decrease in Hispanic-Americans longevity or risk disproportionately affecting this community. |
| Keywords: | Retirement, 401(k), Pensions, Race, Health, Hispanic |
| JEL: | H55 J26 J32 D63 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapn:2015-03&r=age |
| By: | Dorfman,Mark Charles |
| Abstract: | This report provides an initial stocktaking of the characteristics, environment and performance of public and private pensions and elderly assistance programs in Sub-Saharan Africa. It identifies key challenges and suggests reform options for consideration. Considerations for future work and principles for pension policies are also suggested. Two major challenges noted in the report are the need to increase coverage of the labor force by pensions and social insurance schemes, and to increase the proportion of poor elderly covered by social assistance. The report suggests that improving coverage will require a number of parametric reforms to existing contributory schemes, strengthening institutions to serve informal sector workers, and piloting new design options. The report also proposes other parametric reforms, including the harmonization or merger of civil service and national pension schemes. Finally, the report recommends principles to consider for reform, including measures to improve coverage, protect the elderly poor, and better align pension design with needs and enabling conditions, including the needs of rural and informal sector workers. |
| Keywords: | Safety Nets and Transfers,Population Policies,Debt Markets,Emerging Markets,Pensions&Retirement Systems |
| Date: | 2015–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:98131&r=age |
| By: | Italo A. Gutierrez; Pierre-Carl Michaud |
| Abstract: | We estimate the effects of employer downsizing on older workers’ health outcomes using different approaches to control for endogeneity and sample selection. With the exception of the instrumental variables approach, which provides large imprecise estimates, our results suggest that employer downsizing increases the probability that older workers rate their health as fair or poor; increases the risk of showing symptoms of clinical depression; and increases the risk of being diagnosed with stroke, arthritis, and psychiatric or emotional problems. We find weaker evidence that downsizing increases the risk of showing high levels of C-reactive protein (CRP), a measure of general inflammation. We find that downsizing affects health by increasing job insecurity and stress, but that its effects remain statistically significant after controlling for these pathways, suggesting that other mechanisms such as diminished morale and general demotivation also affect worker health. Our findings suggest that employers ought to consider actions to offset the detrimental health effects of reducing personnel on their remaining (older)workers. |
| Keywords: | older workers, employer downsizing, health outcomes |
| JEL: | I12 M51 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:criacr:1511&r=age |
| By: | Emmanouil Platanakis (ICMA Centre, Henley Business School, University of Reading); Charles Sutcliffe (ICMA Centre, Henley Business School, University of Reading); |
| Abstract: | The redesign of defined benefit pension schemes usually results in a substantial redistribution of wealth between age cohorts of members, pensioners, and the sponsor. This is the first study to quantify the redistributive effects of a rule change by a real world scheme (the Universities Superannuation Scheme, USS) where the sponsor underwrites the pension promise. In October 2011 USS closed its final salary scheme to new members, opened a career average revalued earnings (CARE) section, and moved to ‘cap and share’ contribution rates. We find that the pre-October 2011 scheme was not viable in the long run, while the post-October 2011 scheme is probably viable in the long run, but faces medium term problems. In October 2011 future members of USS lost 65% of their pension wealth (or roughly £100,000 per head), equivalent to a reduction of roughly 11% in their total compensation, while those aged over 57 years lost almost nothing. The riskiness of the pension wealth of future members increased by a third, while the riskiness of the present value of the sponsor’s future contributions reduced by 10%. Finally, the sponsor’s wealth increased by about £32.5 billion, equivalent to a reduction of 26% in their pension costs. |
| Keywords: | Defined benefit, Pension scheme, Redistribution, USS, Scheme design, Risk shifting, Risk management |
| JEL: | G22 G23 J32 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:icmadp:icma-dp2015-05&r=age |
| By: | Teresa Ghilarducci; Joelle Saad-Lessler; Bridget Fisher; Siavash Padpour (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Americans nearing retirement do not have enough savings to support their standard of living in retirement. Over 28% of American families ages 50-64 have nothing saved for retirement. The average total balance in all retirement accounts is $150,000, an amount considered inadequate for retirement security. |
| Keywords: | Retirement, 401(k) |
| JEL: | H55 J26 J32 D63 E21 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapn:2015-06&r=age |
| By: | Teresa Ghilarducci; Joelle Saad-Lessler; Kate Bahn (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Minnesota workers, like all American workers, need workplace retirement accounts to achieve an adequate retirement income. This report finds that only a bare majority of workers in Minnesota have access to retirement accounts at work, and the share of workers who do have these accounts is falling. Though it is tempting to attribute the lack of retirement readiness for Minnesota workers to a recession, the reason for the lack of pensions is structural - not enough people have retirement coverage at work and, when they do, the amounts saved are often inadequate. |
| Keywords: | Retirement, Social Security, Minnesota |
| JEL: | J26 H55 E21 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapb:2014-01&r=age |
| By: | Teresa Ghilarducci; Zachary KNauss (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | The erosion of retirement income security in the United States is causing a decline in the living standards of millions of Americans when they retire. The number of 65-year-olds per year who are poor or near poor will increase by 146% between 2013 and 2022. |
| Keywords: | Retirement, 401(k), Projections |
| JEL: | H55 J26 J32 D63 E21 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapn:2015-04&r=age |
| By: | Teresa Ghilarducci; Joelle Saad-Lessler; Kate Bahn; Anthony Bonen (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | In addition to Social Security, Washington workers depend on the accessibility and affordability of employer-sponsored retirement plans to support them in retirement. This report reveals that Washington employers are offering fewer retirement plans to their employees today. The overall decline in plan sponsorship, coupled with the shift from DB to DC plans, represents a real threat to workers' retirement security. Left unchanged, Washington's residents will face increasing downward mobility in retirement. |
| Keywords: | Retirement, Social Security, Washington |
| JEL: | J26 H55 E21 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapb:2014-02&r=age |
| By: | Teresa Ghilarducci; Christian E. Weller (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Better designed retirement savings incentives that target lower-income workers—for instance, those who do not work for an employer that offers retirement benefits—would make a real difference in workers’ retirement preparedness. In a joint issue brief with the Center for American Progress (CAP), CAP Senior Fellow Christian Weller and SCEPA Director Teresa Ghilarducci call for reforming the tax code to prioritize refundable tax credits over new tax deductions; emphasize progressive savings matches that offer relatively higher benefits to lower-income households; create savings incentives that are simple to use; and establish new savings options, such that gaining access to savings incentives depends less on employers offering retirement plans. |
| Keywords: | Retirement, Social Security, Tax, Saving |
| JEL: | H55 J26 J32 D63 E21 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapb:2015-03&r=age |
| By: | Teresa Ghilarducci; Christian E. Weller (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | The growing retirement crisis results, in part, from inefficient savings incentives embedded in the U.S. tax code. In a joint issue brief with the Center for American Progress (CAP), CAP Senior Fellow Christian Weller and SCEPA Director Teresa Ghilarducci find that households that need the most help saving for retirement receive the least assistance from the multitude of savings incentives in the U.S. tax code, for three reasons. First, existing savings incentives can be incredibly complex. Second, savings incentives often benefit higher-income earners more than middle- and lower-income earners. Third, the public loses out on tax revenue that otherwise would have been collected. Tax reform is needed to simplify savings incentives and better target incentives. |
| Keywords: | Retirement, Social Security, Tax, Saving |
| JEL: | H55 J26 J32 D63 E21 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapb:2015-02&r=age |
| By: | Alicia H. Munnell; Jean-Pierre Aubry |
| Abstract: | Beginning in 2015, under new provisions of the Governmental Accounting Standards Board (GASB), the unfunded actuarial accrued liability for public pension plans moved from the footnotes of financial statements to the balance sheets of employers. In addition, localities that participate in “cost-sharing” state plans are now required to report their share of that plan’s unfunded liability on their books. This brief explores the implication of this latter shift. The discussion proceeds as follows. The first section describes the new GASB provisions. The second section illustrates, in detail, our method for applying GASB 68. The third section presents the estimated impact of GASB 68 on the 92 cities in our sample that are participating in cost-sharing state plans, as well as the overall impact on our full sample of 173 cities. The fourth section compares individual results for selected cities. The final section concludes that forcing cities to recognize their share of the state’s unfunded liability may lead them to take more interest in having these liabilities paid off. |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ibslp47&r=age |
| By: | Teresa Ghilarducci; Adam Hayes (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Though well-intentioned, the current system of tax deferral for retirement contributions undermines public policy aimed at strengthening retirement security for all Americans. In fact, it has become a regressive policy that contributes to wealth inequality. This policy note illustrates how two employees who are identical savers and investors in every way except for income receive different rates of return due only to the effects of the tax code. Converting the current system of tax deductions for defined contribution retirement plans to a refundable tax credit would solve this problem and treat all retirement savers the same. |
| Keywords: | Retirement, 401(k), Tax, Inequality |
| JEL: | J26 H2 D63 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapn:2015-01&r=age |
| By: | Evans,Brooks Fox; Palacios,Robert J. |
| Abstract: | Co-residence is an important source of support for the elderly, especially in countries where pension systems do not cover most of the population. This note provides new evidence regarding elderly co-residence patterns in more than 100 developing countries that represent over 90 percent of the developing world population. The authors find a wide range of co-residence rates across countries, ranging from 29 to nearly 100 percent, and a strong inverse relationship between the receipt of a pension and co-residence. The results show the importance of informal support, and have implications for the choice and design of policy instruments aimed at the elderly, including social insurance and assistance. |
| Keywords: | Gender and Law,Pensions&Retirement Systems,Population Policies,Renewable Energy,Gender and Social Development |
| Date: | 2015–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:96557&r=age |
| By: | Campos-Vazquez,Raymundo M.; Lopez-Calva,Luis-Felipe; Lustig,Nora-451471 |
| Abstract: | Wage inequality has declined in Mexico since 2000. Using data from Mexican labor surveys for the period between 2000 and 2014, this paper investigates whether the decline was driven by wages declining more sharply for younger or older workers. The analysis finds that the wages of older workers declined and the decline was more pronounced in the older cohort. This would seem to support the hypothesis that older workers'skills have become obsolete. |
| Keywords: | Work&Working Conditions,Labor Policies,Youth and Government,Labor Markets,Tertiary Education |
| Date: | 2016–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7546&r=age |
| By: | James Staveley-O'Carroll (Economics Division, Babson College); Olena M. Staveley-O'Carroll (Department of Economics, College of the Holy Cross) |
| Abstract: | Government pension systems vary widely from country to country. Evidence from a cross-section of 110 countries indicates that structural differences in public pension programs are related to reallocation of financial capital around the world. More specifically, we find that greater amounts of pension spending are associated with overall net international indebtedness and a net portfolio characterized by equity assets and debt liabilities. We present a two-country overlapping-generations model that can replicate these empirical regularities and elucidate the link between the structure of pension benefits and the resulting portfolio choices of economic agents. In the country with state-guaranteed pension benefits, workers face a lower overall riskiness of lifetime wealth. As a result, they are willing to invest in risky equity financed by the selling of domestic bonds. Workers in the country with no pension system, on the other hand, tend to be net savers and favor safe debt assets in their portfolio. These findings can help to explain the buildup of global financial imbalances over the last three decades as well as to analyze future changes in capital allocation patterns due to the ongoing pension system reforms in many developing and developed countries. |
| Keywords: | global imbalances, international portfolio choice, portfolio risk, pay-as-you-go system, OLG model |
| JEL: | D52 F21 F41 G11 H55 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:hcx:wpaper:1601&r=age |
| By: | Andreas Hoepner (ICMA Centre, Henley Business School, University of Reading;); Lisa Schopohl (ICMA Centre, Henley Business School, University of Reading;); |
| Abstract: | Studying the equity holdings of 31 U.S. state pension funds, we find evidence that the political leaning of their members and political pressures by state politicians impact funds’ investment decisions. State pension funds from states with Democratic leaning members tend to tilt their portfolios more strongly towards companies that perform well on environmental, social and governance (ESG) issues, as compared to their Republican counterparts. This tendency is especially strong if the majority of the state government are Democrats. State pension funds intensify their ESG investing when their members’ political leaning changes from Republican to Democratic, and vice versa, suggesting that these funds align their ESG investment approach with the political leaning of their members. Finally, we find that the state pension funds in our sample neither under- nor outperform on their politically-motivated ESG holdings, implying that their ESG preferences are unlikely financially-driven. |
| Keywords: | ESG, political pressures, political values, portfolio decisions, state pension funds, SRI |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:icmadp:icma-dp2015-06&r=age |
| By: | Teresa Ghilarducci; Alex Pavlakis (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | The recent proliferation of state level retirement reform proposals indicates a broad recognition of the looming retirement crisis, and suggests that the political will for reform is present. In this paper, we detail the proximate causes of American workers’ shortage of retirement savings, evaluate the variety of state level programs that are emerging in response to the crisis, and draw some conclusions about what effective reform should look like. |
| Keywords: | Retirement, Social Security, States, Secure Choice, Marketplace |
| JEL: | J26 H55 E21 J32 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepawp:2016-01&r=age |
| By: | Shachar Kariv (University of California-Berkeley); Dan Silverman (Arizona State University) |
| Abstract: | After middle age, further aging is associated with lower levels of many cognitive abilities, some of which could influence import economic decisions. Our prior research (Choi et al., 2014) shows a substantial negative relationship between age and the consistency of choices with economic rationality (decisionmaking quality). This paper investigates the sources of that negative correlation using panel data on more than 4,000 members of a panel study in the Netherlands. The analysis finds no evidence that the correlation between age and rationality is, in fact, a just a cohort, not an age effect. Similarly, there is little evidence that the correlation is due to other forms of cognitive or health declines. Rather, the findings indicate that age has an independent and negative effect on economic rationality. |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp335&r=age |
| By: | Luc Bissonnette; David Boisclair; François Laliberté-Auger; Steeve Marchand; Pierre-Carl Michaud |
| Abstract: | Nous projetons le niveau d’emploi au Québec d’ici 2050 à l’aide d’un modèle qui simule la démographie et les comportements socio-économiques au niveau individuel. Ces résultats sont contrastés avec les projections effectuées par la Régie des rentes du Québec en 2013 et avec des projections qui maintiennent le niveau d’éducation et les comportements d’emploi inchangés. En dépit du vieillissement démographique qui fera diminuer la population en âge de travailler, les comportements récents sur le marché du travail suggèrent que le Québec aura droit à une hausse des taux d’emploi, surtout chez les travailleurs expérimentés. En conséquence, la croissance totale du niveau de l’emploi de 2015 à 2050 devrait être plus élevée que celle prévue. Nos résultats suggèrent que cette croissance permettra d’amoindrir légèrement les effets du vieillissement en soutenant la croissance économique. |
| Keywords: | Emploi, projections, vieillissement, microsimulation, Québec |
| JEL: | C61 J11 J21 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:criacr:1518&r=age |