Reforming occupational pension schemes: the case of the Netherlands

In many countries, occupational plans are being reformed away from defined-benefit (DB) to defined-contribution (DC) designs. This paper explores the case of the Netherlands, which features a particularly high ratio of occupational pension assets to GDP. Dutch occupational DB plans suffer from a number of serious weaknesses, including ambiguous ownership of assets, back-loading of benefits, and lack of tailor-made risk management. To address these weaknesses, we propose collective individual DC plans that are actuarially fair. These schemes maintain important strengths of collective schemes, such as mandatory saving, collective procurement, and pooling of biometric risks. At the same time, they eliminate intergenerational conflicts about risk management and distribution through transparent individual property rights on financial assets and tailor-made risk profiles in individual accounts. We show how the transitional burden due to phasing out the back-loading of pension benefits can be addressed without a substantial increase in contributions.     

Optimal Decisions on Pension Plans in the Presence of Information Costs and Financial Literacy

Pension reforms are on the political agenda of many countries. Such reforms imply an increasing responsibility on individuals’ side in building an efficient portfolio for retirement. In this paper, we provide a model describing workers’ choices on the allocation of retirement savings in presence of (1) mandatory pension contribution; (2) different pension plans; and (3) information costs and financial literacy investment decisions. In particular, we characterize the results from both a positive and normative standpoint, by highlighting the determinants of individuals’ choice, with special focus on information costs, on the role of income and preferences, and by characterizing the optimal contribution rate to mandatory complementary pension plans. We also introduce endogenous financial literacy and analyze how its optimal level is determined and how it affects the decisions on pension plans.     

中国企业年金税收优惠政策的比较与选择

2005年,随着首批金融机构获得企业年金经办资格认证,中国企业年金保险进入到具体实施阶段.然而,直到2006年底,关于企业年金的缴费方式、基金的投资管理、给付机制、法规监管以及税收优惠政策等一系列相关问题仍未解决,成为严重制约企业年金市场发展的瓶颈.本文着重从企业年金税收优惠政策的比较与选择入手,结合城镇基本养老保险的情况,通过核算国家税式支出、企业年金积累额等指标,对国家采取适当的企业年金税收优惠政策去引导和促进企业年金市场的发展提出理论依据.     

PENSION WEALTH AT MIDLIFE:COMPARING SELF-REPORTS WITH PROVIDER DATA

This paper evaluates the accuracy of estimates of pension wealth based on self-reports by comparing them to estimates based on provider data. Using data from the Health and Retirement Study, we found that few workers are well informed about their future pension benefits. Self-reports were often incomplete and typically varied widely from those based on information from providers. In defined benefit (DB) plans, discrepancies were greatest for workers who had limited education, earned low wages, and did not expect to retire soon. Differences in median pension wealth were smaller at the aggregate level than the individual level, because individual differences tended to offset each other when aggregated. Provider data appear better than self-reports for DB plans, but not for defined contribution (DC) plans. Where both are available, the best method of computing pension wealth may be to estimate DB wealth from provider data and to estimate DC wealth from self-reports.     

Rates of Return and Early Retirement Disincentives: Evidence from a German Pension Reform

To counteract the financial pressure emerging in aging societies, statutory pension schemes are undergoing fundamental reforms in many Western countries. Starting with cohort 1937, Germany introduced permanent pension deductions for early retirement. This study examines the profitability of pension contributions against the background of this reform for cohorts 1935–1945. Internal rates of return (IRR) are used to measure the profitability. For men, the IRR declines from 2.4% to 1.2% and for women from 5.2% to 3.7%. The results suggest that the majority of the trend, about 75–80%, is caused by increased pension contributions and not by the reform.     

Why Sweden's pension reform was able to be successfully implemented

Governments that do not reform pay-as-you-go (PAYG) pension systems will eventually face a pension crisis. In a democracy, reforms require majority support. The problem is that pension reform requires today's generation to bear the burden to avoid burdening tomorrow's generation. Sweden recently passed pension legislation that specifies a gradual transition from a public defined-benefit plan to a defined contribution plan. Why was Sweden successful in reforming its pension system? We find that a political economy perspective helps to answer this question: there are more winners who would vote in favour of the reform than non-winners who would vote against it. When comparing the net effect (present value of expected benefits minus present value of remaining contributions) of the new and old systems, contributions of the working generation (age < 53) are reduced by more than their expected benefits.     

Determinants of pension plan fees in Spain

Pension plans and funds represent a substantial part of the welfare systems in both Europe and Spain. One of the most important factors in the choice of a plan or fund is the performance it obtains. In view of the influence that fees have on performance, the objective of this study is to analyse the variables that determine the management and custodial fees of individual pension plans. The Spanish market for pension plans and funds sets legal caps on these fees, and at the same time the majority of them are commercialized and managed by financial institutions, which can in turn generate a conflict of interests. In this article, we estimate models with censured variables and our findings show how the average investment per plan, the legal status and the size of the management company to which the plan belongs, and the style of the plan are all relevant determinants of the management fee. In turn, the custodial fee is determined by the legal status of the custodial company, the size, the return and the type of plan.     

养老金资产的本土化投资偏好分析——OECD国家的投资经验对中国的启示

随着世界各国养老保障体系的完善,养老金资产规模迅速扩大,各国都将规模庞大的养老金资产投资于金融市场进行保值增值。从OECD国家和新兴市场国家两个方面分析了OECD国家养老金资产在进行投资时存在本土化投资偏好的原因。为了借鉴国外养老金投资管理的经验,逐步完善我国养老保障体系,提出一些有关投资管理的政策建议。     

CHANGING PENSION POLICY AND THE AGING OF AMERICA

The recently enacted Tax Reform Act of 1986 contains a number of pension policy provisions including faster vesting for private-sector, single-employer pension plans and imposing tax penalties on preretirement pension plan distributions that are not saved until retirement age. Since pensions are a long-term commitment, the impact of pension policy changes may not be fully realized for a number of years. For that reason, the effects of the Tax Reform Act's pension provisions are investigated using both short-run and long-run simulation models. Faster vesting would immediately entitle an additional 1.9 million pension plan participants to pension benefits at retirement. This increase would not, however, be translated directly into significant gains in pension recipiency for workers currently in their 50s. Nevertheless, by the time the baby boom generation retires, faster vesting and lump-sum penalties could provide more retirees with pensions and increase the standard of living of pension recipients.     

Contribution-based vs. earnings-related retirement pension systems: some policy proposals for Italy

This paper analyses the relationship between contributions paid and benefits received within the current old age pension scheme, evaluating the implications of reinforcing the link between individual contributions and benefits, in a framework where welfare assistance and social security are kept separate. Section 2 describes the theoretical model, adopted to examine the factors affecting the contribution-based and the earnings-related annual pension or the total pension benefits over the entire retirement period. The consequences that different levels of relevant parameters have on the ratio between the two yearly pensions are, then, analysed. Section 3 illustrates the longitudinal sample of private employees belonging to the National Institute for Social Security (INPS–FPLD), in particular of those who will retire between 1995–96 and 2001: it is used to calculate the annual earnings-related and contribution-based pension. In aceteris paribussituation, allowing for all intragenerational redistribution transfers currently provided by the pension system (through a supplement to an established minimum pension, through ceilings and reversory rights), the annual contribution-based pension appears to be in 1995 about two thirds of the annual earnings-related one. This implies that the State could currently save one third of its expenditure for new FPLD pensioners, by simply switching to a criterion of social security fairness (giving each to his own in actuarial terms) without relinquishing any of the distributive corrections currently enacted within the pension system. Through this potential reform, in the next 7 years total State savings at constant prices would reach 14 000 billion lire, or 2·2% of the stock value of pensions in the same time interval.     

DEFINED CONTRIBUTION PLANS, DEFINED BENEFIT PLANS, AND THE ACCUMULATION OF RETIREMENT WEALTH

The private pension structure in the United States, once dominated by defined benefit (DB) plans, is currently divided between defined contribution (DC) and DB plans. Wealth accumulation in DC plans depends on a participant's contribution behavior and on financial market returns, while accumulation in DB plans is sensitive to a participant's labor market experience and to plan parameters. This paper simulates the distribution of retirement wealth under representative DB and DC plans. It uses data from the Health and Retirement Study (HRS) to explore how asset returns, earnings histories, and retirement plan characteristics contribute to the variation in retirement wealth outcomes. We simulate DC plan accumulation by randomly assigning individuals a share of wages that they and their employer contribute to the plan. We consider several possible asset allocation strategies, with asset returns drawn from the historical return distribution. Our DB plan simulations draw earnings histories from the HRS, and randomly assign each individual a pension plan drawn from a sample of large private and public defined benefit plans. The simulations yield distributions of both DC and DB wealth at retirement. Average retirement wealth accruals under current DC plans exceed average accruals under private sector DB plans, although DC plans are also more likely to generate very low retirement wealth outcomes. The comparison of current DC plans with more generous public sector DB plans is less definitive, because public sector DB plans are more generous on average than their private sector DB counterparts.     

Political Effects on Pension Underfunding

Pension underfunding in the public sector has received considerable attention recently and is often cited as the next looming crisis. The majority of recent research has focused on appropriately measuring the underfunding. In this paper, we employ a political economy framework to show that increases in partisan polarization and electoral uncertainty lead to greater underfunding. Using an unbalanced panel of individual pension plans, we find robust empirical evidence that higher legislative turnover rates, more electoral competition, and term limits all lead to more pension underfunding. The political environments of state and local governments play a pivotal role in pension underfunding.     

Pension Reform during the Demographic Transition

The aim of this paper is to quantify the welfare effects of some currently discussed pension reform proposals in Germany. The analysis is based on an extended overlapping-generations model which accounts for intra-generational heterogeneity, rising life expectancy and declining fertility. Given a baseline path of the economy under the existing unfunded pension system, the model calculates the macroeconomic impact as well as the distributional and efficiency effects of various pension reform measures aimed at reducing the level of the future unfunded pension system. Simulations reveal that pension reforms cannot be evaluated solely in terms of inter- and intra-generational equity. Substantial efficiency gains or losses might arise if the linkage between contributions and benefits is improved or weakened.     

Financial market lobbies and pension reform

We develop a model in which firms in the financial market lobby the government to lower compulsory contributions to the public pension system. Firms lobby in order to increase demand from households for their old-age savings products. We conclude with a comparison of two major pension reforms in Europe exemplifying the influence of financial market lobbies on pension policies.     

The role of personality traits in pension decisions: findings and policy recommendations

Many countries need to stimulate pension participation and contribution to ensure their citizens are prepared adequately for retirement. Identifying at-risk groups with tendencies of not joining pension plans will help governments target strategies to improve pension awareness and participation. This study investigates the role of personality traits in pension decision making using data from the UK Household Longitudinal Study. Our results demonstrate that Extraversion significantly correlates with non-participation in private pensions, including both employer run and personal pensions. Individuals who are high in Conscientiousness are more likely to participate and pay more into personal pensions. Openness to experience is negatively correlated with saving via personal pensions. Agreeableness and Extraversion correlate inversely with the amount contributed to personal plans. This paper discusses our findings in detail and offers policy implications which may help promote pension participation and ease the problem of old age poverty.     

养老保险企业缴费对员工工资、就业的影响分析

本文通过全国名地/市养老保险企业缴费比率随时间的外生变动趋势来识别养老保险缴费对企业的影响。研究得出,在控制样本选择后养老保险企业缴费比例每增加1个百分点,企业将挤出员工工资的0.6%,减少员工福利的0.6%,社会养老保险未使得企业在职工工资与福利之间转换。对员工工资与福利的加总量,养老保险企业缴费比例每增加1个百分点,将使其减少0.7%。对企业雇用人数,养老保险企业缴费比例每增加1个百分点,企业雇用人数将减少0.8%。对不同类型的企业,养老保险的影响存在差异。对低技术水平企业,养老保险企业缴费比例上涨的挤出效应较弱。     

The Joint Distribution of Net Worth and Pension Wealth in Germany

The research on wealth inequality has generally focused on real and financial assets, while giving little attention to pension wealth: the present value of future pension entitlements from public and company pension schemes. This is surprising given the important role pension plans play in guaranteeing material security and well‐being for a majority of the population, and suggests that they should be accounted for in peoples’ wealth portfolios. Using novel data from the Socio‐Economic Panel (SOEP), we study the incidence, relevance, and distribution of individual pension wealth, net worth, and augmented wealth (the sum of the two) in Germany. Further, we investigate age‐wealth profiles and differences between East and West Germany.     

我国新型农村养老保险对财政体系可持续性的影响研究——基于代际核算方法的模拟分析

文章利用Auerbach等(1991)提出的代际核算方法,基于符合国情的参数假设,分析了各种"新农保"方案对财政体系可持续性的影响。模拟结果表明,按照目前方案建立"新农保"体系并不会给政府增加太多负担,"新农保"覆盖面扩大的快慢对财政体系的负担基本也没有影响。由于个人账户中积累的资金目前按照一年期定期存款计息,政府承担的个人账户长寿风险非常有限。"新农保"体系带给政府的主要财政负担来自全额负担基础养老金,如果政府把全国的基础养老金都提高至上海市每月135元的水平,给政府增加的负担不会过多。因此,政府可以加快"新农保"覆盖面扩大的速度,并在现有的财力水平下把全国农村的基础养老金都提高至上海市的水平,但是提高幅度不宜进一步加大。     

Account-based retiree medical plans: what's good for your pension plan may be good for your retiree medical plan

Many of the same forces that caused employers to gravitate toward account-based pension plans are beginning to spark similar changes in retiree medical plans. As medical costs continue to escalate, account-based retiree medical plans offer a new way to manage company outlays, while preserving an important benefit for retirees.     

Expectations,uncertainty and institutions. An application to the analysis of social security reforms

The aging process that many developed economies will face in the medium-term is leading to reforms in the public pensions systems in order to solve the potential financial unsustainability generated by the foreseeable increase in the expenditure in pension benefits (assuming that the current social security contributions and the eligibility conditions will remain unchanged). Neoclassical economics defends a radical reform of these systems, substituting the current pay-as-you-go (PAYGO) systems by funded systems. In this paper, using the Post-Keynesian theory as a theoretical framework, we provide an alternative reflection to that proposed by the neoclassical economics about the choice between the alternative pension systems. The focus of the paper is the advantages of the PAYGO pension systems to stabilize the expectations of future income.