Effects of Pensions on Saving
Effects of Pensions on Saving

Author: Thomas L. Steinmeier

Publisher:

Published: 1998

Total Pages:

ISBN-13:

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This paper examines the composition and distribution of total wealth for a cohort of 51 to 61 year olds from the Health and Retirement Study (HRS), and the role of pensions in forming retirement wealth. Pension coverage is widespread, covering two thirds of households and accounting for one quarter of accumulated wealth. Social security benefits account for another quarter of total wealth. As calculated from earnings records, the present disco value of social security benefits is less than the present value of taxes paid. Earlier than many expect, social security is already a poor investment on average for this cohort on the verge of retirement. Lifetime earnings are measured for each individual in the HRS from social security earnings records augmented by self reported earnings histories. This result is consistent with the predictions of a stripped down life cycle model. Also consistent is a finding that the ratio of wealth to lifetime earnings is no higher for those with pensions than for those without pensions. Multivariate regressions relating total wealth to pension coverage and pension value, suggest that pensions cause very limited displacement of other wealth, if any. Pensions add to total wealth by at least half the value of the pension, and in most estimates by a good deal more. These findings are not consistent with a simple life cycle explanation for savings. They also raise questions about whether pensions are fundamentally a tax avoidance device, allowing substitution of pension for nonpension savings

Aging and the Macroeconomy
Aging and the Macroeconomy

Author: National Research Council

Publisher: National Academies Press

Published: 2013-01-10

Total Pages: 230

ISBN-13: 0309261961

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The United States is in the midst of a major demographic shift. In the coming decades, people aged 65 and over will make up an increasingly large percentage of the population: The ratio of people aged 65+ to people aged 20-64 will rise by 80%. This shift is happening for two reasons: people are living longer, and many couples are choosing to have fewer children and to have those children somewhat later in life. The resulting demographic shift will present the nation with economic challenges, both to absorb the costs and to leverage the benefits of an aging population. Aging and the Macroeconomy: Long-Term Implications of an Older Population presents the fundamental factors driving the aging of the U.S. population, as well as its societal implications and likely long-term macroeconomic effects in a global context. The report finds that, while population aging does not pose an insurmountable challenge to the nation, it is imperative that sensible policies are implemented soon to allow companies and households to respond. It offers four practical approaches for preparing resources to support the future consumption of households and for adapting to the new economic landscape.

The Impact of Rapid Aging and Pension Reform on Savings and the Labor Supply
The Impact of Rapid Aging and Pension Reform on Savings and the Labor Supply

Author: Hui He

Publisher: International Monetary Fund

Published: 2019-03-18

Total Pages: 59

ISBN-13: 1498304451

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We study, both empirically and quantitatively, the role of savings and the labor supply in self-insurance channels over the life cycle when one faces not only idiosyncratic income risks, but also changes in longevity risk and pension benefits. We pick China as a case study since China has undergone a dramatic process of rapid aging and a tremendous reduction in social security benefits for the period 1995-2009. We find that both savings and the labor supply are quantitatively important self-insurance channels in responding to changes in longevity risk and pension benefits, and the responses via adjustment to savings and labor supply have significant macroeconomic implications. Applying the model to China, we find that the pension reform and rapid aging together contribute 55 percent of the increase in the household saving rate from 1995 to 2009, and they jointly capture about 64 percent of the drastic increase in the labor supply for the same period.

Pensions Policy
Pensions Policy

Author: Anthony Neuberger

Publisher: Centre for Economic Policy Research

Published: 2003

Total Pages: 100

ISBN-13: 9781898128816

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David McCarthy and Anthony Neuberger review the research that has been done internationally in the area of pensions policy.

Saving for Retirement
Saving for Retirement

Author: Gordon L. Clark

Publisher: OUP Oxford

Published: 2012-01-05

Total Pages: 240

ISBN-13: 0191618993

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Understanding the ways in which people save for their retirement is an urgent issue. So much has changed in the last 10 to 15 years, especially in the area of the provision of pensions and retirement income. Around the world, greater and greater responsibility is being allocated to individuals while governments discount their contributions to social security and employers retreat from the provision of supplementary retirement income. This book explores the behavioral revolution and its implications for understanding financial decision-making and saving for the future. Recognizing the profound implications of this research program, it goes beyond issues of risk aversion, framing, and decision-making to consider how social identity and the resources due to people by virtue of their place in society figure in savings behavior. It gives considerable attention to the context of the environment in which people make financial decisions, arguing that this allows a better understanding of the coexistence of sophistication and naivety apparent in patterns of retirement saving. Utilizing databases from the UK, the book provides an empirical foundation to its theoretical arguments, demonstrating how an integrated approach to individual financial decision-making is necessary if we are to address the apparent shortfall in many people's planning for the future. The book concludes by setting the agenda for the design, governance, and regulation of pension savings schemes consistent with delivering cost-effective solutions to pension adequacy. In these ways, it sets forth a strategy for rethinking individual behavior as well as the design of retirement income systems.

How Persistent Low Returns Will Shape Saving and Retirement
How Persistent Low Returns Will Shape Saving and Retirement

Author: Olivia S. Mitchell

Publisher: Oxford University Press

Published: 2018-08-22

Total Pages: 320

ISBN-13: 0192562401

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Financial market developments over the past decade have undermined what was once thought to be conventional wisdom about saving, investment, and retirement spending. How Persistent Low Returns Will Shape Saving and Retirement explores how the weak capital market performance predicted for the next several years will shape pension saving, investment, and decumulation plans. Academics, policymakers, and industry leaders debate alternative strategies to cope with these challenges globally, as economic growth remains slow and low returns become the 'new normal.' This volume includes contributions from plan sponsors, benefit specialists, actuaries, academics, regulators, and others working to design resilient pensions for the next decades. Together, they identify several new tools for retirement savers and pension managers.

Financial Literacy
Financial Literacy

Author: Olivia S. Mitchell

Publisher: Oxford University Press

Published: 2011-10-27

Total Pages: 328

ISBN-13: 0199696810

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As defined contribution pensions become prevalent, retirees are increasingly responsible for managing their own pension assets and thus their own financial literacy becomes crucial. Based on empirical evidence and new research, the book examines how financial literacy enhances retirement decision-making in ever more complex financial markets.