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on Economics of Ageing |
| By: | Nolan, Anne (ESRI, Dublin); Doorley, Karina (Economic and Social Research Institute, Dublin) |
| Abstract: | The economic and financial landscape facing individuals as they move through their life-cycle is becoming increasing complex. Internationally, declines in the coverage and generosity of public programmes mean that individuals now need to assume responsibility for a greater share of their future retirement saving and health and long-term care costs. Financial literacy, defined as knowledge of fundamental financial concepts and the ability to do simple financial calculations, is a key skill required to ensure adequate financial protection in older age. In this paper, we investigate the extent to which financial literacy is an important determinant of financial protection in the older pre-retirement population in Ireland. Using data from the Irish Longitudinal Study on Ageing (TILDA), we find significantly higher levels of financial literacy among men, those with higher levels of education and cognition, and the self-employed. Financial literacy is in turn associated with higher total household wealth, lower financial stress and higher expected retirement income. We find little evidence that those with higher levels of financial literacy are more likely to have various forms of supplementary pension cover however, which may reflect a limited role for financial literacy over and above other important determinants such as income and education. |
| Keywords: | financial literacy, retirement, Ireland |
| JEL: | J32 E21 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12187&r=all |
| By: | Veena S. Raleigh (The King's Fund) |
| Abstract: | This paper reports on trends in life expectancy in the 28 EU countries and some other high-income OECD countries, and examines potential explanations for the slowdown in improvements in recent years. The slowdown in improvements in life expectancy since 2011 has been greatest in the USA, where life expectancy has fallen in recent years, and the UK, but France, Germany, Sweden and Netherlands have also seen a sharp slowdown. Overall, the pace of mortality improvement has slowed in several EU countries and Australia and Canada since 2011. Diseases of older ages are major contributors to the slowdown. Improvements in cardiovascular (CVD) disease mortality have slowed in many countries, respiratory diseases, including influenza and pneumonia, have claimed excess lives in some winters, and deaths from dementia and Alzheimer's disease are rising. In some countries, notably the USA and the UK, mortality improvements have also slowed or even reversed among working age adults because of the rising numbers dying from drug-related accidental poisoning. The report also considers wider contributing factors. Although some risk factors, such as smoking, excessive alcohol consumption, high blood pressure and cholesterol levels, continue to decline in most EU countries, the prevalence of obesity and diabetes continues to rise. Adverse trends in inequalities could also have an impact if some population groups experience lower gains in longevity than others, thereby reducing the overall gain. Looking ahead, it is unclear whether the current slowdown in mortality improvements in some EU countries and the USA is a long-term trend or not, whether the slowdown in major killers such as CVD will persist, and whether or not the excess winter mortality seen in some years becomes a regular feature given population ageing and increasing numbers of frail, older people. The timely monitoring and investigation of mortality trends, including through international collaboration where possible, can facilitate early implementation of remedial strategies. |
| JEL: | I12 I14 I15 |
| Date: | 2019–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaad:108-en&r=all |
| By: | Henri Sterdyniak (Observatoire français des conjonctures économiques) |
| Abstract: | Les pensions de réversion, les pensions versées au conjoint survivant après le décès d’un ayant-droit à une pension de retraite, constituent un élément important du système français de retraite. En 2016, elles ont représenté 36,3 milliards d’euros, soit 12 % des pensions de vieillesse, 1,6 % du PIB. Les écarts de durée de vie et d’âge au mariage font que 89 % des bénéficiaires sont des femmes. La question des pensions de réversion est donc liée à celles des inégalités femmes/hommes de niveau de retraite. Les pensions de réversion font passer les retraites des femmes de 58 à 71 % de celles des hommes. Elles apparaissent indispensables puisqu’elles permettent aux veuves de conserver un niveau de vie satisfaisant. Elles peuvent être considérées comme la survivance d’un modèle patriarcal périmé, mais elles sont aussi une composante logique du caractère familial du système socio-fiscal français. Chaque régime de retraite a actuellement une réglementation différente en matière de pension de réversion : le taux est de 50 % (fonction publique, sans condition d’âge), 54 % (régime général, avec condition de ressources et condition d’âge), 60 % (régime complémentaire), avec condition d’âge). Cette disparité est peu justifiable et source d’injustices, réelles ou ressenties. Par ailleurs, en cas de divorce ou de remise en couple, les législations sont disparates, compliquées et contestables. La réforme des retraites, annoncée par Emmanuel Macron, met obligatoirement en question les pensions de réversion. Elle obligera heureusement à uniformiser la réglementation. Elle devrait être l’occasion de repenser l’ensemble du système à partir d’un choix social ouvert auquel ce texte se propose de contribuer. Selon nous, les pensions de réversion doivent être maintenues. Leur législation doit s’appuyer sur les principes de l’assurance sociale. La pension de réversion doit assurer au conjoint survivant le même niveau de vie qu’avant le décès de son conjoint, sans que le couple n’ait besoin de recourir à l’assurance privée. Le montant de la pension de réversion devrait donc être des deux tiers de la pension du conjoint décédé moins un tiers de la pension du conjoint survivant. La condition d’âge devrait être uniformisée, d’abord à 55 ans puis progressivement vers 60 ans. Les allocations de veuvage précoce et d’éducation des enfants devraient être couvertes par des dispositifs de prévoyance à généraliser. Le divorce ferait perdre les droits à la pension de réversion, mais cela serait pris en compte dans le jugement de divorce, pour la fixation de la prestation compensatoire ou par un partage arbitré des points acquis durant le mariage. Nous discutons et écartons les projets de prise en compte de la durée du mariage, de partage des droits (splitting), d’extension au Pacs (tel qu’il est actuellement), de sur-cotisation ou de baisse des pensions des couples mariés. |
| Keywords: | Pensions de réversion; Réforme des retraites |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/454dvjiqop8p78bjh3a0suo3gj&r=all |
| By: | Michaelides, Alexander; Milidonis, Andreas; Papakyriakou, Panayiotis |
| Abstract: | We use a difference-in-differences approach to examine the causal impact of the funding ratios of U.S. corporate defined benefit (DB) pension plans on the assumption of expected return on pension assets (EROA). To make the causal case, we use the 2008 global financial crisis as an exogenous shock to the funding ratio of DB pension plans, and the simultaneous implementation of the Pension Protection Act, which emphasized the accountability of underfunded pension plans. We find that DB pension plans making the transition from fully funded to underfunded status over this period significantly revise their EROA assumption upward. The upward revisions in EROA are economically significant and generate obligation-reducing outcomes for corporate plans sponsors: a switch from fully funded to underfunded status generates at least a 40 (and up to a 80) basis point increase in EROA, which, in turn, corresponds to an average annual reduction in pension contributions of $6 (to $11) million. |
| Keywords: | Defined benefit pension plans; EROA; pension assumptions; underfunded |
| JEL: | G11 G32 J32 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13591&r=all |
| By: | Abrahamsen, Signe A. (University of Bergen, Department of Economics); Grøtting, Maja Weemes (Norwegian Social Research, Oslo Metropolitan University) |
| Abstract: | Health-care expenditures and the demand for caregiving are increasing concerns for policy makers. Although informal care to a certain extent may substitute for costly formal care, providing informal care may come at a cost to caregivers in terms of their own health. However, evidence of causal effects of care responsibilities on health is limited, especially for long-term outcomes. In this paper, we estimate long-term effects of a formal care expansion for the elderly on the health of their middle-aged daughters. We exploit a reform in the federal funding of formal care for Norwegian municipalities that caused a greater expansion of home care provision in municipalities that initially had lower coverage rates. We find that expanding formal care reduced sickness absence in the short run, primarily due to reduced absences related to musculoskeletal and psychological disorders. In general, we find no effects on long-term health outcomes. |
| Keywords: | Formal and informal eldercare; sickness absence; health |
| JEL: | I10 J14 J22 J38 |
| Date: | 2019–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bergec:2019_002&r=all |
| By: | Doorley, Karina (Economic and Social Research Institute, Dublin); Nolan, Anne (ESRI, Dublin) |
| Abstract: | Financial literacy is higher for men than for women and high financial literacy has been linked to higher wealth and better retirement planning. However, relatively little is known about the decision making process for retirement savings within couples and about how the gap or interaction between the financial literacy of members of a couple influences their preparation for retirement. This paper investigates the relationship between the financial literacy of members of pre-retirement couples and their level of wealth and financial stress using TILDA data for Ireland. We find that joint financial literacy is more highly correlated with household wealth, particularly real estate, than the financial literacy of individual members of the couple but that, where individual level financial literacy is associated with wealth, it is the financial literacy of the man in the couple which plays the most important role. |
| Keywords: | retirement, financial literacy, wealth, couples |
| JEL: | J32 E21 D14 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12188&r=all |
| By: | Andreeva, Andriyana; Yolova, Galina |
| Abstract: | Резюме. В доклада се анализират особеностите при защитата правата на осигурените лица в доброволното осигуряване, в качеството им на потребители на услуги по застраховане и лично пенсионно осигуряване. Способите за защита на лицата предвид специалният закон – Кодекса за социално осигуряване се анализират на две основни нива. От една страна, с оглед особеностите на осигурителния договор и предоставените от него възможности, а от друга - предвид законовите механизми и методите за въздействие на потребителите при представителност на интересите им в съответните органи. На база на анализа се правят изводи и препоръки по приложението на нормите. Abstract. The report analyzes the peculiarities of the protection of the rights of the insured persons in the voluntary insurance as consumers of insurance and personal pension insurance services. The ways of protecting individuals under the special law - the Social Security Code are analyzed at two main levels. On the one hand, given the particularities of the insurance contract and the opportunities it provides, and on the other hand, given the legal mechanisms and methods of impact of the consumers in the representation of their interests in the respective bodies. On the basis of the analysis, conclusions and recommendations on the application of the norms are made. |
| Keywords: | insurance, voluntary pension insurance, pension insurance companies, insured persons |
| JEL: | K31 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92819&r=all |
| By: | Renata Bottazzi (University of Bologna and Institute for Fiscal Studies, London); Serena Trucchi (Department of Economics, University Of Venice Cà Foscari); Matthew Wakefield (University of Bologna and Institute for Fiscal Studies, London) |
| Abstract: | We look at how strongly shocks to wealth affect labour supply, using Italian data. We use asset price shocks to provide a measure of wealth changes that is exogenous to the household’s saving and labour supply. Results point to significant effects of wealth on: hours of work; whether agents leave their jobs; and, labour earnings. The magnitude of these effects can be substantial, for example for individuals who suffered larger wealth losses during the financial crisis. Responses are similar for men and women on average, but older working‐age individuals have relatively strong responses that drive the population results. Short‐run effects are somewhat persistent |
| Keywords: | Labour Supply, Financial wealth shocks, Wealth effects |
| JEL: | J22 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2019:10&r=all |
| By: | Margherita Borella; Mariacristina De Nardi; Fang Yang |
| Abstract: | White, non-college-educated Americans born in the 1960s face shorter life expectancies, higher medical expenses, and lower wages per unit of human capital compared with those born in the 1940s, and men's wages declined more than women's. After documenting these changes, we use a life-cycle model of couples and singles to evaluate their effects. The drop in wages depressed the labor supply of men and increased that of women, especially in married couples. Their shorter life expectancy reduced their retirement savings but the increase in out-of-pocket medical expenses increased them by more. Welfare losses, measured a one-time asset compensation are 12.5%, 8%, and 7.2% of the present discounted value of earnings for single men, couples, and single women, respectively. Lower wages explain 47-58% of these losses, shorter life expectancies 25-34%, and higher medical expenses account for the rest. |
| JEL: | E21 H31 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25661&r=all |
| By: | Abigail Loxton (Department of Economics Indiana University) |
| Abstract: | To what extent do parents exhibit preferential treatment for one gender with respect to financial gifts to children? Using the Health and Retirement Study from 1992-2014, I estimate differences in the frequency and magnitude of gifts to sons and daughters. Conditional on a transfer, there is no evidence of differences in amounts between sons and daughters. However parents give to daughters at higher rates. I explore potential mechanisms for this disparity: in particular, I address the altruism and exchange motives for inter vivos transfers. I find that the difference in giving rates is partially explained by higher expected rates of future care from daughters. Even after controlling for discrepancy in care-taking, income levels, and other observable characteristics, parents are still 10-20% more likely to give a transfer to their daughters. The discrepancy in giving rates is driven by unmarried children: once daughters marry they are less likely to receive a transfer. |
| Keywords: | inter vivos transfers; gender differences; altruism; informal care |
| JEL: | D64 J14 J16 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:inu:caeprp:2019002&r=all |
| By: | Abramov, Alexander (Абрамов, Александр) (The Russian Presidential Academy of National Economy and Public Administration); Radygin, Alexander (Радыгин, Александр) (The Russian Presidential Academy of National Economy and Public Administration); Chernova, Maria (Чернова, Мария) (The Russian Presidential Academy of National Economy and Public Administration) |
| Abstract: | The paper presents data collected from non-state pension funds, self-regulating organizations and the Bank of Russia, long series of ruble non-state pension funds, including our estimates of the net return of funds. These figures are compared with the rate of inflation and the return on OFZ portfolio. Prepared proposals to improve the public reporting of non-state pension funds, which could help to become more accessible to fund investors and all interested parties information about the performance of the funds. |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:031939&r=all |
| By: | Hornstein, Andreas (Federal Reserve Bank of Richmond); Kudlyak, Marianna (Federal Reserve Bank of San Francisco) |
| Abstract: | We estimate trends in the labor force participation (LFP) and unemployment rates for demographic groups differentiated by age, gender, and education, using a parsimonious statistical model of age, cohort and cycle effects. Based on the group trends, we construct trends for the aggregate LFP and unemployment rate. Important drivers of the aggregate LFP rate trend are demographic factors, with increasing educational attainment being important throughout the sample and ageing of the population becoming more important since 2000, and changes of groups' trend LFP rates, e.g. for women prior to 2000. The aggregate unemployment rate trend on the other hand is almost exclusively driven by demographic factors, with about equal contributions from an older and more educated population. Extrapolating the estimated trends using Census Bureau population forecasts and our own forecasts for educational shares, we project that over the next 10 years the trend LFP rate will decline to 61.1% from its 2018 value of 62.7%, and the trend unemployment rate will decline to 4.3% from its 2018 value of 4.7%. |
| Date: | 2019–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2019-07&r=all |
| By: | Miguel Ángel García Díaz |
| Abstract: | El presente y, sobre todo, el futuro del sistema de pensiones es uno de los problemas que más preocupan a los españoles. Este documento hace un repaso sobre la situación actual y los retos de futuro del sistema público de pensiones, demostrando la falta de adecuación a la realidad de algunas percepciones muy extendidas en la sociedad española. Aunque no existen soluciones mágicas e indoloras para afrontar un escenario de envejecimiento por la mayor esperanza de vida y la llegada a la edad de jubilación de la generación del baby boom, el estudio concluye que nuestro sistema público de pensiones puede ser financieramente viable con prestaciones similares, en términos relativos, a las de otros países europeos. El auténtico reto es conseguir un equilibrio que combine suficiencia con equidad individual e intergeneracional. Porque no defiende mejor el sistema público de pensiones aquel que promete las prestaciones más generosas sin reparar en medios, sino el que garantiza permanentemente el pago de pensiones razonables sin trasladar cargas excesivas a las próximas generaciones. |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaeee:eee2019-01&r=all |
| By: | Helen Levy (University of Michigan); Thomas Buchmueller (University of Michigan); Sayeh Nikpay (Vanderbilt University Medical Center) |
| Abstract: | We analyze whether the Affordable Care Act (ACA) has affected labor supply of older Americans using data that span more than four years after the policy’s implementation in 2014. We find no changes in labor supply of older Americans either in response to subsidized marketplace coverage, which became available nationally in 2014, or in response to the expansion of Medicaid eligibility in some states but not others. We analyze multiple dimensions of labor supply — labor force participation; employment; full-time work conditional on employment — as well as several measures of retirement including self-reported retirement and the receipt of retirement income. We fail to find labor supply effects even for subgroups with less than a high school education or those with fair or poor health, who might have been expected to have a greater labor supply response. The lack of a labor supply response stands in contrast to the large gains in coverage observed in 2014. These results suggest that for Americans approaching retirement the Affordable Care Act achieved its primary goal of increasing coverage without the unintended consequence of reducing labor supply. |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp393&r=all |