Disability-free life expectancy had been rising continuously in the United States until 2010, suggesting working longer as a solution for those financially unprepared for retirement. However, recent developments suggest improvements in working life expectancy have stalled, especially for minorities and those with less education. This paper uses data from the National Vital Statistics System, the American Community Survey, and the National Health Interview Survey to assess how recent trends, up to 2018, in institutionalization, physical impediments to work, and mortality have affected working life expectancy for men and women age 50, by race and education.

Our study investigates the influence of the Korean National Pension Fund's equity ownership on voting premiums, revealing a statistically significant reduction. In particular, we establish the liquidity pathway as the primary factor among the three channels previously suggested in the literature. Analysis of the COVID-19 era and the VKospi index underscores this predominance. These findings enrich the literature on public pension funds and capital markets, providing policymakers in emerging economies with a deeper understanding of the dynamics involved in establishing pension investment institutions.

This paper develops a general equilibrium life-cycle model with endogenous retirement that focuses on the interplay between old-age pensions (OAP) and disability pensions (DP) in Germany. Germany has introduced a phased-in increase of the normal retirement age from age 65 to 67 (Reform 2007) and closed off other routes to early OAP retirement. This reform was followed by a phased-in expansion of future DP benefits (Reform 2018). Our simulation results indicate that the first reform will induce a shift toward DP retirement, while the Reform 2018 will even neutralize the financial and economic gains of the Reform 2007 if current DP eligibility and benefit rules remain unchanged. We therefore highlight the increased relevance of DP when reforming the retirement system and retirement incentives in an aging society. Securing the financial stability of public pensions requires activation and rehabilitation of sick elderly in the workforce and tight access to disability benefits.

We analyze how taxes affect the choice between a life-long annuity and a one-off lump sum payment, the so-called annuitization decision. Using administrative data from a large Swiss pension fund, we impute taxes for the lump sum and the life-long annuity option. We show that taxes can explain a significant part of the variation in annuity rates. Exploiting kinks in the tax schedule of the one-off lump sum, we further find evidence for tax optimization strategies. Our findings suggest that individuals react strongly to tax incentives when making retirement choices.

We investigate whether a benchmark and non-constant risk aversion affect the probability density distribution of optimal wealth at retirement. We maximize the expected utility of the ratio of pension wealth at retirement to an inflation-indexed benchmark. Together with a threshold and a lower bound, we are able to generate closed-form solutions. We find that this non-constant risk aversion type of utility could shift the probability density distribution of optimal wealth more towards the benchmark, and that the probability of achieving a certain percentage of the desired benchmark could be increased. The probability density distribution generated under constant relative risk aversion (CRRA) risk preference is more widely spread along the benchmark.

We develop a general equilibrium overlapping generations framework with incompletely rational individuals to study old-age saving incentives. Such incentives are used worldwide to help achieve the high savings rate required to sustain sufficient consumption in old age. We show that they raise the welfare of financially illiterate individuals and those with a high degree of time inconsistency. They also reduce the incidence of poverty in old age. We further quantify the fiscal cost, crowd-out, and ability to target the transfers to individuals who need the most. Given the high prevalence of these schemes, our paper has broad policy implications.

We examine whether an individual's inability to save in the last 12 months affects the extent to which they are concerned about their future financial security and their propensity to plan for retirement. We use an original survey based upon representative samples of working individuals in 16 countries. We show that individuals who were unable to save over the 12-month period prior to the survey are less likely to consider well-being in retirement as their major financial concern. They are also less likely to invest in supplementary pension funds than those who were able to accumulate savings. We provide evidence that these findings are robust under several specifications and are mediated by respondents' perceived income prospects and assessment of their current financial situations.

We study individuals' incentives to make investment decisions. Using data from a large pension system in Chile we find that individuals who are active in managing their investments have, on average, poor performance. We provide robust evidence suggesting that learning plays an important part in this phenomenon. Indeed, individuals who have made successful investment decisions in the past go on to trade more frequently. However, this result holds when using a naive definition for successful decisions. Also, average performance is negatively related to the number of investment decisions, casting doubt on the existence of market timing skills.

We examine the behavior of Canadian life annuity prices by measuring how quickly and fully they respond to changes in market interest rates. The price responses, though not immediate, start relatively quickly and become more complete over time. Over the whole sample period, the responses appear to be asymmetric – annuity providers generally raise prices faster when interest rates decline than reduce prices when the opposite occurs, which is disadvantageous to annuity customers. In addition, we find unusual annuity price behavior during the period of the 2008 financial crisis.

This study documents the credit outcomes of older adults immediately before and after the onset of the COVID-19 pandemic in the United States. On average, older adults experienced larger reductions in total household debt relative to younger adults. However, there is significant heterogeneity, where older adults with higher incomes experienced the largest declines, and lower-income older adults experienced an increase in total debt. Overall, these data highlight important trends in the credit experiences of older adults that may affect their future financial security.

This study examines the interest in different pension payout schemes when full annuitization is the default. We focus on three possible pension payout schemes: a flat-rate annuity, a high/low annuity-based profile, and a partial lump sum at retirement with a lower flat-rate annuity after that. We make use of a vignette study and find substantial interest in each of the three payout schemes. Interest in the lump sum scheme increases when a higher percentage can be taken out as a lump sum or when interest rates or replacement rates are lower. Interest in a high/low annuity-based profile increases when the high annuity is valid for a shorter period.

We test the effectiveness of an online interactive pension dashboard in improving pension funds participants' ability to make adequate pension decisions in terms of pension preparation, knowledge, self-efficacy, expectations, and intention-to-act. In a randomized survey experiment, treated participants of two pension funds receive an encouragement to visit an online pension dashboard. Treated individuals have more pension knowledge and an increased self-efficacy in the pension domain, especially so for females. The dashboard does not have a significant impact on the pension preparation or the errors in forecasts of pension income nor does it impact the willingness to act if there is a need to do so.

We propose an easy to implement yield curve extrapolation method to determine long-term interest rates suitable for regulatory valuation. We empirically evaluate this approach for the German nominal bond market, by estimating the model on bonds with maturities up to 20 years and assessing the out-of-sample performance for bonds with maturities beyond 20 years. Even though observed long-term yields are somewhat lower than the predicted yields, the method performs quite well empirically given its simplicity. We perform a case study on pension fund liability valuation and show that our proposed method would have a substantial impact on liability values.

One of the most important financial decisions that pension participants make concerns how they access their pension assets when they terminate employment with their plan sponsor. Their choices depend both on own preferences and the options offered by their retirement plan. This paper examines both past and future pension withdrawal choices for those with defined benefit (DB) and defined contribution (DC) pensions, separately. Our data are drawn from a set of pension distribution questions we fielded in the Understanding American Study. Results show significant differences in distribution choices based on the type of retirement plan, with individuals covered by DB plans significantly more likely to select annuities compared to similar employees covered by DC plans. We also find differences in how higher annual income affects annuity choices based on coverage by DB plans. Individuals with lower levels of financial literacy and lower annual income have less knowledge of basic pension characteristics.

This paper addresses the retirement income planning problem from the perspective of the four main building blocks of retirement income: state pension, mortality credits, investment strategies, and drawdown schedules. We detail how these building blocks interact to form a retiree's overall retirement income portfolio, and what trade-offs and interactions must be considered. We find that while access to each building block increases the retiree's certainty equivalent consumption, the most substantial contributor to this increase is from utilization of the mortality credit building block (i.e., annuities).

This article examines the G-Fund, which is one of the five funds in the federal government employee retirement Thrift Savings Plan. The G-Fund is held as internal debt by the U.S. Department of Treasury. Our examination shows that the fund balance is exclusively composed of 1-day notes that are redeemed/reissued every business day, generating $55 trillion in annual debt reissuance. We also show that the fund balance drops substantially as resources are transferred to the general fund when the government is constrained by a debt ceiling and returns to pre-constraint levels when the ceiling is expanded/suspended.

Using the instrumental variable approach on nationally representative, individual-level data on middle-aged pension participants in China, this study quantifies the peer effect in the context of forming pension expectations. The study confirms the existence of the peer effect in forming pension expectations in the community. The probability of having optimistic pension expectations significantly increases by 0.309 percentage points if the proportion of optimists in the community increases by 1 percentage point. Moreover, the study explores the channels through which the peer effect operates and finds that the social learning channel dominates the social norms channel. The study also provides empirical evidence that village and township leaders as well as those with old pension program experience are opinion leaders in their peer group. Lastly, we find peer effects in other pension decisions, e.g., contribution size, and the contribution size increases by the proportion of optimists in the community. The study provides policy implications on ways to improve willingness to contribute to pension programs.

As a result of unfavorable demographic processes, the pension systems in the Central and Eastern European (CEE) EU countries face significant challenges, which has made the implementation of reforms inevitable in the last decade. Relying on economic theory, this paper analyses the effects of the Hungarian pension reforms in comparison with those of other CEE countries, and discusses the consequences from the point of view of social policy and the sustainability of the pension schemes. We explore the reasons why the reforms in Hungary ultimately did not improve sustainability but rather contributed to dismantling the social care system. Therefore, the Hungarian case provides useful lessons for other countries, and at the same time underlines the importance of automatic adjustment mechanisms. The study pays particular attention to the theoretical analysis of pension indexation because its accurate quantitative effects are far from being sufficiently clarified in the literature, although it is vital for a thoughtful evaluation of pension reforms.

Pension systems increasingly require active involvement from their participants for retirement planning. This leads to the need for a proper level of financial literacy to foster decision-making. Based on the Chilean Social Protection Survey and the Regional Development Index data, specific characteristics related to the region of residence, such as the quality of life, access to job opportunities, and available connectivity tools, are seen to have a positive impact on pension knowledge. Hence, these regional level results provide inputs to policymakers for developing appropriate policies regarding pension knowledge.

We investigate the cause of the increase in mortgage investments by pension funds after the financial crisis. We show that, after the introduction of the new financial assessment framework in 2015, funds that experienced larger reductions in the funding ratio during the 2008–2012 crisis invested more in mortgages. We test the hypothesis that a past recovery mode has motivated pension funds to invest more in mortgages after the crisis. Funds that seek to further hedge their interest rate risks aim for a different risk/return investment profile. Mortgages could contribute to a less risky portfolio, as they have become even safer since the introduction of several new regulations in 2013. Recovery modes after the crisis combined with the new framework are a cause of the recent surge in mortgage holding by pension funds; we find that this led to a 39% increase in their mortgage investments, despite the fact that these are still low relative to the overall investments of pension funds.