Mandatory Pension Scheme Research Articles

Gender-differences in retirement from entrepreneurship: the influence of pension policies across Europe

PurposeThe interest in older entrepreneurs increases due to population aging. Previous research showed clear gender-differences among older entrepreneurs. This study investigates whether such gender-differences also exist in the retirement transition from entrepreneurship. It explores the influence of pension regulations for entrepreneurs on these gender-differences.Design/methodology/approachLongitudinal micro-level data from the Survey of Health, Aging and Retirement in Europe is analyzed in multichannel sequence analyses and cluster analyses. Developments from age 50 to 69 are compared in the dimensions of entrepreneurship, employment and old-age pensions.FindingsEntrepreneurs retire in three different transition patterns: (1) entrepreneurs becoming pensioners at 60, (2) entrepreneurs becoming pensioners at 65 and (3) individuals combining entrepreneurship with employment until they become pensioners at 65. Female entrepreneurs follow the same transition patterns as their male counterparts but retire earlier. Pension regulations for entrepreneurs modify the extent of the gender-differences within a country. Mandatory pension schemes with identical state pension ages for men and women reduce gender-differences, whereas mandatory schemes with gender-differences in the state pension age increase them. Schemes without mandatory coverage range in between the other two.Originality/valueThis article expands our knowledge on gender-differences among older entrepreneurs. These gender-differences also extent to how entrepreneurs transition into retirement. Pension regulations for entrepreneurs influence the extent of the gender-differences. Therefore, pension regulations for entrepreneurs constitute tools for promoting or hindering gender equality.

Planning and saving for retirement

In this paper, I analyse the interplay between costly planning and imperfect self-control in the context of a dynamic retirement saving problem. For an exogenous planning horizon, poor self-control leads to fewer periods with positive savings and to under-accumulation of pension wealth. Consequently, an agent characterised by poor self-control postpones planning for retirement, or does not take action at all, if the cost of planning is high enough. The agent’s level of income emerges as another determinant of the planning decision, and thus the wealth-to-income ratio can be income dependent, even with CRRA preferences. Considering a mandatory pension scheme with rigid contribution and decumulation schedules, I demonstrate how the extent of crowding out of private savings and the associated welfare effects vary with the agent’s propensity to plan actively.

Denmark

Denmark’s insurance sector is highly developed with a particularly high penetration and density in the life sector. Traditionally, work-related life insurance and pension savings are offered as a combined package, and life insurance companies dominate the market for mandatory pension schemes for employees. The high penetration explains the overall size of the insurance sector, which exceeds those of peers from other Nordic countries and various other EU member states. Assets managed by the insurance industry amounted to 146 percent of the GDP at end-2018, compared to 72 percent for the EU average.

Analysis of The Impact of Pension Scheme of State-Owned Companies of China Railways

<p>The purpose of this study was to investigate the factors influencing supplementary pension contribution among employees of China Railway Group Company Limited. Simple random sampling technique was used. A structured questionnaire with close-ended questions was used to solicit data from 421 respondents. Hierarchical multiple linear regression was employed in the analysis of the data. The findings of the study revealed that certain factors such as tax policy and reward system had influences on employees’ decisions to take additional pension schemes besides the mandatory pension schemes. A comfortable retired life of employees depends on the savings made during the days of active service. The study revealed that tax policy positively influenced supplementary pension contribution among employees. Reward system has been considered in many cases as having a positive effect on employee decisions. The findings of the study revealed that reward system positively and significantly influenced supplementary pension contribution among employees. In addition, both tax policy and reward system had influence on employee lifestyle.</p>

SINGAPORE’S LIFE PROGRAM: ACTUARIAL FRAMEWORK, LONGEVITY RISK AND IMPACT OF ANNUITY FUND RETURN

The Central Provident Fund (CPF) is a defined-contribution savings plan forming the key pillar of the pension system in Singapore. The CPF Lifelong Income For the Elderly (LIFE) program, which provides lifetime income for retirees, is a mandatory pension scheme for all Singapore residents. In this paper we construct an actuarial framework to analyze the LIFE program. We use this framework to study the plan payout outcomes with respect to changes in mortality and annuity fund return assumptions. We also examine the effects of some possible changes in the program on the payouts and bequests.

Mandatory Pension Scheme in Armenia: Impact Assessment

Effective from 2014, new pension scheme will be introduced in Armenia which will affect those under age of 40. The new scheme assumes that each individual will contribute some amount from his/her salary which will be invested and distributed back after retirement. The paper analyses the impact of the new scheme in two directions. First, it tries to uncover the pass-through of the scheme’s impact on macroeconomic variables and particularly on market interest rates. Using vector error correction models (VEC) and informed decision making, we have found that it has downward impact on interest rates of local deposits and treasuries. Using the forecast path of interest rates and portfolio composition, Monte Carlo simulation technique has enabled us to obtain the possible paths of pension wealth portfolio of the average wage individual who will retire on 2038 (first retirees under the system). The pension portfolio value as of December 2037 was used to calculate the annuity payment amount for the retirement period.

Factors behind the administrative fees of private pension systems: an international analysis

AbstractThis work has three objectives: first, to provide a comprehensive review of administrative fees; second, to construct a comparative data set for 53 countries; and third, to perform an empirical analysis that highlights the main determinants of pension fees from a world-wide perspective. The paper provides an econometric analysis by using panel data techniques. It finds the greater statistical significance of market size, result that is reinforced by mandatory pension schemes. Other factors, such as structural country conditions, market's vertical integration and the presence of an occupational pension scheme, seem to be less relevant.

A Description of the Pension System in Uganda: Need for Reform

The current pension system in Uganda is similar to those in most Anglo-speaking countries in Sub-Saharan Africa. The system is fragmented lacking a policy framework for its efficient operation. Consequently, coverage is low, the public service schemes are unfunded and expensive and the governance of the mandatory pension scheme is unsatisfactory. Private pension schemes operate voluntarily without a law save for the common law principles of trusts and are not supervised. The system is ripe for fundamental reforms which should include the introduction of a supervisory framework, parametric reforms in the public service schemes in order to manage the ever rising implicit pension debt, introduction of best practice governance principles in both the National Social Security Fund and private occupational pension schemes. While pension reform is a major policy which the government should carefully consider, yet it is possible for the same to be developed in phases.

The Bright Side of Shiller-Swaps: A Solution To Inter-Generational Risk Sharing

This paper investigates the diversification demand of an agent, who is faced with the alternative to swap aggregate labor income risk into equity exposure, through her individual account in a mandatory pension scheme. The framework for the analysis is a life-cycle model of a borrowing constrained individual's consumption and portfolio choice in the presence of uncertain labor income and realistically calibrated tax and pension systems. Pension benefits stem from both a defined benefit and a notionally defined contribution part, the latter being indexed to stochastic aggregate labor income. We show that agents, depending on state and swap premium, will be either buyers or sellers of such a swap, and that inter-generational risk sharing can therefore be achieved.

The Dark Side of Wage Indexed Pensions

This paper investigates some welfare effects of forced saving through a mandatory pension scheme. The framework for the analysis is a life-cycle model of a borrowing constrained individual's consumption and portfolio choice in the presence of uncertain labour income and realistically calibrated tax and pension systems. Pension benefits stem from both a defined benefit and a notionally defined contribution part, the latter being indexed to stochastic aggregate labour income. We show that agents attribute little value to their pension savings in early life. Furthermore, we estimate the welfare loss for individuals in mid-life associated with the dependency between pension returns and labour income growth to 1.2% of annual consumption.

How Will We Provide and Pay for Long-Term Care?

Ageing produces not only financial dependency but also physical dependency. The projected fiscal costs of increased long-term care provision can be higher than those of increased pension provision. Cost projections can be questioned for failing to take account of increased demands for formal care as female labour force participation rises and as social constrains and household structures supportive of informal caring disappear. New ways are needed to pay for care, and conventional methods have not proved successful. Voluntary saving is unlikely to suffice, equity release schemes are inefficient, and mandatory care insurance schemes add burdens to wage costs in the same way as mandatory pension schemes do. The paper proposes the recouping of care costs from bequests as a way of increasing economic efficiency, of increasing choice and provision, and of reinforcing traditional intra-familial responsibilities. However, some redistribution to the less well-off elderly is inevitable. Evidence and examples of care technologies, of care costs, and of care financing systems are drawn from across the OECD area.

The Long-run Effects of the Italian Pension Reforms

The paper analysesthe reforms of the Italian mandatory pension scheme for employeeslegislated in the 1990s. To assess the effects of the reforms,a microsimulation model calibrated on cross-section data is developed.The model is aimed at estimating the average income of a memberof a cohort, as well as the average per capita income of allindividuals alive in a given year. The long-run effects of thereform are analysed, comparing the characteristics of alternativefinancing schemes. A substantial improvement of the equity aswell as the long-run sustainability of the Italian public pensionschemes emerges. However, the dreary demographic scenario callsfor further tightening of eligibility rules sometime in the nextdecades if long-run sustainability of public debt is to be achieved.On the basis of sensitivity analysis, some changes aimed at hedgingthe system against unexpected shocks are suggested.