FLEXIBLE RETIREMENT

Flexible retirement – that is, the opportunity to choose one's own personal retirement age – is a hedge against pension risk and provides insurance to workers facing health or productivity shocks. Flexible retirement and flexible pension schemes are in practice closely linked because of imperfect capital markets and institutional restrictions. I discuss three necessary conditions to provide insurance through flexible retirement. First, it should be possible to adjust the pension starting date at limited cost. This condition is gradually being fulfilled, as many countries are moving toward more actuarially neutral pension schemes. Second, individuals should be willing to adjust their labor supply in case of a wealth shock. This condition seems largely fulfilled, although the available empirical evidence suggests that the ‘standard retirement age’ is at least as important as the income effect. Third, the labor market should be able to deal with flexible individual retirement decisions. This condition is gaining importance, but has not yet received much attention in the literature. Institutions often hamper employment past the ‘standard retirement age’. Moreover, the hiring rates of older workers are low and their unemployment duration is high. Institutional reforms facilitating flexible retirement opportunities are desirable from an insurance perspective.     

Using simulation as a tool in selecting a retirement age under defined benefit pension plans

This paper examines how simulation modeling can be used to select a retirement age under defined benefit pension plans. This approach construes the variables affecting pension benefits as probabilistic variables. Simulations are then run to generate probabilistic values for the real value of pension benefits for alternative retirement ages. By construing variables affecting pension benefits as probability distributions, this approach reflects the uncertainty facing individuals contemplating retirement. By generating estimates of retirement benefits as probability distributions rather than as single deterministic values, the model provides individuals with a more realistic and complete frame of reference for making the retirement decision. The author is grateful to an anonymous referee and Joachim Zietz. JEF editor, for helpful comments.     

ECONOMIC DETERMINANTS OF WORKERS’ RETIREMENT DECISIONS

The landscape for older workers has changed dramatically in recent decades. Governments have made cuts to public pension programs, private pensions have shifted from defined benefit to defined contribution plans, equity and housing markets have been unusually volatile, and workers have experienced declining morbidity and mortality. At the same time, the labor force participation rate for older men and women has been rising over the past two decades, implying later retirement. Are these phenomena related? This paper reviews the large and growing body of literature exploring the economic determinants of workers’ retirement decisions, including public and private pensions, wealth and savings, health and health insurance, and labor demand.     

Australia's retirement income system

This paper reviews the current reforms to Australia's retirement income structure which now incorporates a means-tested age pension, a compulsory retirement enefit system which is fully unded in the private sector and a voluntary savings scheme. This approach has been widely discussed in he international scene and some consider it to epresent an ideal structure. However, a number of fundamental problems remain and these are discussed.     

Pensions: theories of underfunding

The widespread underfunding of private defined benefit pensions has generated concern over the viability of employers' promises of retirement benefits. Years ago, similar concerns led to the creation of pension benefit insurance plans by governments in the United States and a number of other countries. This paper studies the causes of underfunding in an environment without pension benefit insurance. We find that the optimal level of retirement benefits will be offered and fully funded if the employer has sufficient internal funds or is able to borrow all it needs. If loans are not enforceable, an employer with limited resources will generally underfund pensions. Further, if pension investments earn lower returns than other investments, pensions will be underfunded. Thus, the paper highlights the link between financial markets and the underfunding of pensions.     

The treatment of registered retirement savings plans at maturity

In recent years we have witnessed a dramatic rise in the popularity of tax-deductible registered retirement savings plans as an increasing number of Canadians have taken advantage of the tax saving associated with these do-it-yourself pension schemes. As a quid pro quo, the Income Tax Act restricts the manner in which the proceeds of an RRSP can be used to generate a retirement income. This note examines the annuity aspect of RRSPs and how the imposition of such a constraint on withdrawals affects the optimal control solution to the individual planholder's utility maximization problem.     

Wealth spurt unlikely to offer much aid to the consumer

• ? UK households are wealthier than ever, thanks to continued growth in house prices and a buoyant stock market. However, the nature and distribution of that wealth means that support for consumer spending from a ‘wealth effect’ is likely to be both small and less than in the past.
• ? In Q4 2016, households' holdings of owner‐occupied property and net holdings of financial assets amounted to £9.2tr, almost 8% up on the level a year earlier. This was equivalent to 719% of annual household gross disposable income, a near‐record high.
• ? A long‐established feature of economics is the concept of a ‘wealth effect’ – the premise that faced with rising wealth levels, households feel more comfortable and economically secure and hence spend more. But the economic literature differs on how large this effect is.
• ? Our own Global Model suggests that the wealth effect is modest, with a 10% rise in wealth boosting consumer spending by only around 0.2%. One reason is that about half of financial wealth consists of highly illiquid assets in pension funds. But this component has recently been the biggest source of growth in wealth.
• ? Given differences in the propensity to consume out of income and wealth, the concentration of financial and housing assets among better‐off households will also act to neuter the size of any wealth effect. The wealthiest one percent of households hold around 20% of household wealth. But the bottom quartile owns only 1.5%.
• ? Meanwhile, the housing market has created an ever‐greater concentration of wealth. The share of households owning their own property fell from 71% to 63% in the decade to 2015. But the share of private renters more than doubled in the same period, from 9% to just over 19%. And the pre‐crisis appetite to finance consumption by borrowing against the value of property shows no sign of returning.

     

民办院校适应终身教育体系的教学模式分析

终身教育是指教育系统为个人提供一生参与有组织的学习机会,以适应社会发展的需要。民办院校要适应终身教育体系需要不断的调整教育模式,同时终身教育体系也将成为民办院校的主要生存方式。本文以天津市重点调研课题项目"天津市经济社会发展对民办院校的需求研究"为背景研究民办院校教学模式的改革方向。     

Default risk and private student loans: Implications for higher education policies

In recent years, the proportion of students facing a binding constraint on government student loans has grown. This has led to substantially increased use of private loans as a supplementary source of finance for households׳ higher education investment. A critical aspect of the private market for student loans is that loan terms must reflect students׳ risk of default. College investment will therefore differ from a world in which government student loans, whose terms are not sensitive to credit risk, are expanded to no longer bind. Moreover, beyond simply crowding out private lending, expansions of the government student loan program will feed back into default risk on private loans. The goal of this paper is to provide a quantitative assessment of the likely effects of the private market for student loans on college enrollment. We build a model of college investment that reflects uninsured idiosyncratic risk and a well-defined life-cycle that is consistent with observed borrowing and default behavior across family income and college preparedness. We find that higher government borrowing limits increase college investment but lead to more default in the private market for student loans, while tuition subsides increase college investment and reduce default rates in the private market. Consequently, higher limits on government student loans have small negative welfare effects, while tuition subsidies increase aggregate welfare.     

HOW TO CLEAR UP THE PENSIONS MESS

All three pillars of the British pensions system are crumbling. The basic state pension is unsustainable in its present form. Defined benefit occupational pension schemes are fast disappearing, and with them the retirement hopes of millions of workers. A further 3 million low-income earners are not saving enough for their retirement. And uncertainty about pensions choices is widespread. In each case the primary cause of the problem is governmental or regulatory failure. The paper makes eight general and four specific proposals for restoring the system.     

The Rise and Demise of Defined Benefit Pension Plans

The Defined Benefit Pension Plan (DBPP), once regarded as the gold standard of traditional corporate pension plans, has fallen upon hard times. Corporate sponsors regard the plans as financial drains, fountains of bad publicity, and targets for heavy-handed government regulation. Employees covered by the plans fear they will not deliver on the promises employers made to provide financial security after retirement. Legislative fixes for the system have hastened, not slowed down, the exodus of employers from DBPP. The authors of this paper agree that DBPP is, indeed, an endangered species in the private sector, but concur with the criticism that the conventional explanations for it – particularly in the trade literature – tend be self-serving, superficial and not convincing and often incomplete in their analysis. Using Porter’s model of competition to identify the relative strengths and weaknesses of competing influences we endorse the conclusion that the failure of DBPP is one of strategic choice by employers whose power and influence in the global economy is not effectively counter-balanced by labor, or by forces sympathetic to labor. The growing trend towards the Defined Contribution Pension Plan (DCPP) is consonant with employers’ interests but a setback for employees who had to give up the “gold standard” (DBPP). Even the paradoxical effect of ERISA hastening the demise of the pension system it was created to reform is less puzzling when examined in the context of who had influence in drafting the legislation, writing regulations and enforcing the law.     

How are pension integration and pension benefits related?

Pension integration is the ability to allow differentiated pension benefits across earnings groups. In the academic literature, it is often described as a way for firms to reduce pension benefits (and therefore costs). Justified by the requirement that firms pay half of Social Security payments, integrated pensions are typically found to reduce benefits for lower income workers. Data on retirees from the Health and Retirement Study, however, reveal a more complex picture where some individuals receive more benefits when one of their pension plans is integrated, ceteris paribus. Some reasons are discussed why this might be the case.     

INSURANCE BY GOVERNMENT OR AGAINST GOVERNMENT? OVERVIEW OF PUBLIC RISK MANAGEMENT POLICIES

In what contexts is it desirable that the government, rather than the private sector, takes on the role of an insurer and helps people reduce risks? Our discussion implies that while in a number of areas individuals benefit from well-designed insurance provided by their government, ill-designed public policies (for example existing pay-as-you-go pension systems) force individuals to insure against their government. It is further discussed how governments could improve their risk managing role in many areas by using income contingent loans, provided the country has high-quality institutions and governance. Such loans to artists, sportspeople, flood victims or collapsing financial institutions would replace the existing nonrepayable transfers, grants, subsidies and bailouts. Using a simple efficiency-equity-sustainability framework for comparing income contingent schemes with conventional public and private insurance policies, we document that this would enable governments to extend their insurance assistance to a greater number of people and institutions – in a way that is not only equitable but also efficient and fiscally sustainable.     

Redefining retirement: age equality and the rise of performance management

How do individuals retire when there is no default retirement age? The changes to the retirement regulations were aimed at extending individual choice, but with the use of performance management, employers have a new tool with which to control the time and manner of retirement. Employees who fail to perform as required are now to be ‘managed out’. Therefore, retirement needs to be treated as an outcome of workplace employment relations with consequences for all age groups.     

随机利率下缴费预定计划职业年金的替代率研究

事业单位养老保险制度改革关系到我国基本养老保险制度的改革进程和可持续发展问题,而面对事业单位养老金替代率90％,企业单位替代率60％的差距,事业单位养老保险制度改革遇到了一定的阻力．本文考察了如果采用缴费预定计划（Dc计划）建立职业年金,事业单位养老保险的替代率问题．养老金的投资收益率是影响替代率的关键因素,而这一因素受金融市场影响较大,这里假设它为随机变量。研究发现：（1）由于女性职工的法定退休年龄早,平均寿命又比较长,对于相同的缴费率,男性的养老金替代率明显高于女性的替代率;（2）缴费率是影响替代率的另一因素,为了保持较为合理的替代率,实现养老保险制度的平稳改革,我们建议合适的缴费率为11%。     

Simulating the Reform of Means‐tested Benefits with Endogenous Take‐up and Claim Costs*

Microsimulation models are commonly used to examine the distributional impact of reforms of the means‐tested benefit system. Take‐up behaviour is related to the level of entitlement, so reform may induce changes in take‐up. We develop a stochastic simulation method and apply it to a probit model of ‘income support’ take‐up by the UK pensioners. The method allows us to adjust net income for the welfare losses because of tangible or intangible claim costs. Endogenous take‐up and claim costs both have an important impact on the simulated outcomes of the policy reform.     

Defined benefit versus defined contribution pension plans: How are the interests of employees and the public best served?

Prior to the enactment of the Employee Retirement Income Security Act of 1974 the rate of formation of defined benefit retirement plans exceeded the rate of formation of defined contribution retirement plans. Following its enactment the trend has been reversed. This article reviews the development of public policy with respect to privately sponsored retirement benefits, takes note of the legislatively mandated regulatory distinctions between defined benefit and defined contribution plans, outlines the distinctions between the plans from the perspective of plan sponsors versus plan participants, and questions the appropriateness of the movement away from defined benefit plans in terms of public policy objectives regarding retirement income security.     

The public–private pension mix in OECD countries

This article provides a survey of selected aspects of the relationship between public and private pension provision in European countries in the Organisation for Economic Co‐operation and Development and compares this with other regions of the OECD. Population ageing has led many OECD countries to undertake a wide range of pension reforms. The overall effect of these reforms has in many cases been to significantly reduce public pension promises. This, in turn, has increased the interest in the role of private pensions, which has expanded significantly in a number of OECD countries. The article discusses the extent to which a number of countries will need to further increase private provision in order to guarantee adequate future retirement incomes.     

论企业年金负债的会计处理对企业资本结构的影响

实施企业年金计划企业的会计报表显示，这些企业的财务杠杆率相对企业的举债能力而言普遍偏低，但如果企业将年金计划的偿付责任作为企业长期负债合并到企业资产负债表中，则这类企业的低财务杠杆率相对于最优财务杠杆率的差距将减小。本文从企业年金缴费对应征税收入影响和会计处理的角度，分析了企业年金计划对企业边际税率和企业资本结构调整的作用。     

The effects of pension rights and retirement age on training participation: Evidence from a natural experiment

This paper uses a natural experiment approach to identify the effects of an exogenous change in future pension benefits on workers' training participation. We use unique matched survey and administrative data for male employees in the Dutch public sector who were born in 1949 or 1950. Only the latter were subjected to a major pension reform that diminished their pension rights. We find that this exogenous shock to pension rights postpones expected retirement and increases participation in training courses among older employees, although exclusively for those employed in large organizations.