Old-age Provision Research Articles

The Impact of the Financial Crisis on Private Old-age Provision

The Impact of the Financial Crisis on Private Old-age Provision

Pension Reform in Nigeria

While the Chilean pension reform has received considerable attention, its emulation in Nigeria has not. This article is the first in-depth analysis of the Nigerian reform. It suggests that the Nigerian authorities failed to learn the lessons of Chile. They transposed a system that both failed to serve the country from which it was copied and that is inappropriate to the country to which it was copied. For countries such as Nigeria, alternative forms of provision for old age are needed. A social pension might be considered.

Saving for Retirement—A Case for Financial Education in Germany and UK? An Economic Perspective

Demographic changes, tight public budgets, and reduced generosity of occupational pension plans shift the responsibility for an adequate retirement provision towards the individual. Applying the theoretical perspectives of Behavioural Finance and New Institutionalism to the domain of retirement provision offers insights into the difficulties individuals are facing in planning for retirement, carrying out, and revising plans. Lacking financial literacy seems to lie at the heart of the problem and points to a possible solution: providing financial education to consumers through non-governmental organizations and state-related agencies. This article is examining which role consumer education and consumer advice can play to enhance financial literacy with regard to pensions and old-age provision. As two case studies Germany and the UK are compared because the institutional set-up of the pension systems and the approaches towards consumer policy are very different. The case studies show that financial education with regard to old-age provision can be successful if it reaches consumers in their environment at life-stages where important decisions need to be made. To achieve that considerable efforts have to be taken in terms of funding and organizational set-up. However, evaluation is necessary to prove the effectiveness of the education especially for vulnerable consumer groups. If evaluation reveals that these groups cannot be targeted effectively or that consumers are not taking action subsequently to attending financial education, there might be a case for changing behaviour through the institutional set-up of pension schemes (i.e., through automatic enrolment) and using financial education as a supportive policy instrument.

한국 중고령자의 노인교육이 노후준비에 미치는 영향

본 연구는 중고령자를 대상으로 휴(休)상태에 있거나 퇴직이후를 위한 노인준비교육이 노인의 생활에 미칠 영향과 교육프로그램에 대한 자료를 얻고자함이 본연구의 목적이다. 실증 연구를 통하여 다음과 같은 연구결과를 얻었다. 첫째, 노인교육의 필요성 인식과 노인교육 참여 욕구가 노후준비에 영향을 미치는 것으로 나타났다. 둘째, 퇴직기대 유형의 새로운 출발, 경력완성, 계속기대가 노후준비에 영향을 미치는 것으로 나타났다. 셋째, 노인교육의 필요성 인식은 노후의 신체적 준비, 심리적 준비, 경제적 준비에 퇴직기대가 부분적인 매개 효과를 보였고, 노인교육의 참여욕구는 퇴직기대가 노후의 신체적 준비에 완전매개효과를 가져왔으며, 퇴직기대가 노후의 심리적 준비, 경제적 준비에 는 부분적인 매개효과를 보였다. 넷째, 인구통계학적인 특성으로는 노인교육의 필요성 인식과 교육 참여욕구, 퇴직기대, 노후준비의 인식이 성별, 연령, 직업, 학력에 따라 통계적으로 유의미한 결과를 제시하고 있는 것으로 나타났다. The purpose of this study is to analyze the statistical data to get the government to have positive recognition of education for middle-aged and aged people about provision for old age after retirement and present a model of policy direction of realistic elderly education for middle-aged and aged people and an ideal program for middle-aged and aged people in Korea. Such an empirical research obtained the following results. First, as for effects of recognition of the need of elderly education and the desire to participate in elderly education on provision for retirement, the need of elderly education and the desire to participate in elderly education were found to have effects. Second, as for effects of the level of retirement expectation on provision for retirement, new departure, career completion, and continuous expectation were found to have effects. Third, as for mediating effects of retirement expectation in terms of effects of recognition of the need of elderly education and the level of desire for participation, the need of elderly education has retirement expectation partly affect physical, psychological, and economic preparation. As for the desire to participate in elderly education, expectation of retirement had completely mediating effects on physical preparation and partly mediating effects on psychological and economic preparation. Fourth, the need of elderly education, the desire for participation, retirement expectation, and recognition of provision for retirement by general properties were found to have statistically significant results in terms of gender, age, occupation, and educational background.

Saving incentives, old-age provision and displacement effects: evidence from the recent German pension reform

AbstractIn response to population aging, pay-as-you-go pensions are being reduced in almost all developed countries. In many countries, governments aim to fill the resulting gap with subsidized private pensions. This paper exploits the recent German pension reform to shed new light on the uptake of voluntary, but heavily subsidized private pension schemes. Specifically, we investigate how the uptake of the recently introduced ‘Riester pensions’ depends on state-provided saving incentives, and how well the targeting at families and low-income households works in practice.We show that, after a slow start, private pension plans took off very quickly. While saving incentives were effective in reaching parents, they were less successful in attracting low-income earners, although Riester pensions exhibit a more equal pattern by income than occupational pensions and unsubsidized private pension plans.We also provide circumstantial evidence on displacement effects between saving for old-age provision and other purposes. Households who plan to purchase housing are less likely to have a Riester pension. The same holds for households who attach high importance to a bequest motive. Occupational pensions and other forms of private pensions, however, act as complements rather than as substitutes.

Supplementary Pension Schemes in Italy: Features, Development and Opportunities for Workers

Participation in supplementary pension funds allows workers to exploit tax benefits and payroll employees to take advantage of employer contributions. The simulations reported in the paper show that these two components can considerably increase workers' retirement wealth. Data show that returns on supplementary pension funds may be greater than the revaluation rate of the so-called Trattamento di fine rapporto (Tfr, severance pay entitlements that also serve as provision for old age and are funded by workers' contributions). As for the liquidity of accrued positions, recent changes in the law give retirement wealth held in pension funds a degree of flexibility comparable to that of the Tfr. The paper shows that scale economies may be substantial. Cost moderation also requires transparency and comparability of charges and fees: they are also essential in stimulating competition and allowing workers to move freely from expensive retirement schemes to schemes charging lower fees. In this respect the limits on the portability of employer contributions discourage worker mobility across different pension schemes. Italian workers seem to overestimate the level of the future public pension. This result suggests the importance of strengthening public efforts aimed at providing workers with appropriate information, to make them aware of their retirement position.

Old age in Byzantine society

ABSTRACTThis paper examines the status afforded old age in the Byzantine Empire. Frequently neglected in accounts of state formation or comparative history, this Christian imperial state transformed the moral ordering of the lifecourse. In contrast to both classical Greek and Roman society, old age acquired a distinct moral authority in Byzantine society. This status was not confined to a few members of the elite as in Sparta or Rome. The economic vulnerability, physical frailty and social marginality accompanying old age conferred an equal moral claim upon society that the state actively addressed. A mix of institutionalised and individual charities created a prototype ‘welfare state’ within which provision for old age played a significant part. Despite its neglect by most social historians of old age, the Byzantine Empire is of considerable historical significance in the development of the contemporary constructions of old age. Just as the Byzantine Empire helped erode the practice of slavery that had been widespread in the ancient Greek and Roman societies, so too did it help to create a prototype welfare state in which individual enterprise was tempered by a collective sense of inclusive Christian responsibility. The consideration extended by Byzantine society, to old age, to its weakness as well as to its wisdom and authority, instituted a step change from earlier classical traditions.

A Simulation Method to Measure the Tax Burden on Highly Skilled Manpower

A model is presented for simulating the tax burden on highly skilled manpower. The effective average tax rate, defined as the relative wedge between total remuneration and disposable income, is computed. Income and payroll taxes and social security contributions not yielding an equivalent benefit are taken into account. The compensation package consists of cash payments and old-age provision. To integrate retirement benefits and their tax treatment, an inter-temporal approach is used. The results indicate that Germany and France have higher tax burdens than the UK and the USA, that Germany grants the strongest tax relief for families, and that occupational pension plans are favourable in all countries.

A Simulation Method to Measure the Effective Tax Rate on Highly Skilled Labor

A model is presented for simulating the level of taxes imposed on highly skilled labor. The effective average tax rate, defined as the relative wedge between employment costs and disposable income, is computed. Income and payroll taxes and social security contributions not yielding an equivalent benefit are taken into account. The compensation package consists of cash payments and old-age provision. To integrate retirement benefits and their tax treatment, an intertemporal approach is used. The results indicate a wide dispersion of effective tax rates across Europe and the U.S. Slovakia, Switzerland and the U.S. taxhighly skilled labor at a low rate. Scandinavian countries, Belgium, and Slovenia turn out to be high-tax countries.

Risk management of pensions from the perspective of loss aversion

Abstract This paper studies two interrelated questions. First, is a pay-as-you-go (PAYG) pension component beneficial from a risk management point of view? Second, does optimal risk management of old-age consumption differ between different income groups? The analysis is based on so-called lexicographic loss aversion preferences. Interest in these preferences stems from the fact that they explain the cross-section of individuals' savings and asset allocation choices better than alternative models. I find that all income groups benefit from the presence of a substantial PAYG component. Only for the two highest income quintiles old-age provision should heavily rely on equity investments.

Auswirkungen des demographischen Wandels auf die Kapitalmarkte*

Abstract: The focus of this study is on the interrelations between ageing societies and capital markets. In this context, a number of interesting questions arise, which this study discusses: What is the future role of capital markets for old-age provisions? Which investment alternatives will gain importance? How will savings in general be affected? What is the impact on securities prices? How likely is a so-called asset meltdown (i.e. a rapid fall in securities prices due to a withdrawal of assets by the retiring baby-boomer generation)? Can international diversification help to mitigate such negative effects? Our study is based on a survey among financial experts. Their assessment of the effects of ageing societies on capital markets is presented and discussed.

Flexicurity – the German trajectory

The focus of this article is the concept of ‘flexicurity’, flexibility linked to social security. We shall look at the issue in terms of the institutional framework in Germany and as an alternative to pure flexibilisation. The central elements are the four related concepts of (i) transitional labour markets, (ii) collective bargaining and working time policies which safeguard employment, (iii) lifelong learning, and (iv) provision for old age. These can be looked at from an analytical perspective, as well as in terms of the periods of employment and of post-employment. Furthermore, we deal with different forms of atypical employment in terms of the concept of flexicurity developed here.

Attitudes toward Policy on Ageing. Results of the Population Policy Acceptance Survey in Austria

Like all modern societies Austria is faced with the process of demographic ageing. This paper concentrates on the question of how current policies in the field of old-age provision are being viewed and how Austrians envisage this issue for the future. Departing from an assessment of population ageing, results will be presented for the following topics: Attitudes towards the state's obligations and responsibilities in the field of social policies; Attitudes towards the future design of the pension system; Attitudes towards the transition into retirement and Preferences concerning the retirement age. The findings ultimately raise the central question of how, in view of the known economic and demographic conditions, employment and social policy can be better integrated in order to allow older employees to remain part of the workforce for a longer time.

Politics of Pension Reform — The French Case in a Comparative Perspective

This paper analyzes national processes of pension reform in countries with systems of old-age provision largely following the Bismarckian type (Austria, France, Germany, Italy, Sweden). Operating on a defined benefit/pay-as-you-go basis and mainly financed out of wage-based social contributions, pension systems in these countries are highly vulnerable to demographic and economic pressures. Therefore, pension reform has emerged as a major issue in these countries since the early 1990s. However, since substantial pension reform inevitably requires the imposition of tangible losses to large parts of the electorate, pension policy-makers face considerable political risks. As a closer inspection of national patterns of pension policy-making shows, the political feasibility of pension reforms and the degree of adjustment in pension policy critically depends on the government's ability to orchestrate a reform consensus either with the parliamentary opposition or with the trade unions. The paper tries to identify the conditions under which a ‘pension pact’ between those actors is likely to emerge. It argues that among the countries under study only France lacks the preconditions for a stable political consensus over pension reform and therefore has only made very limited progress.

The Implications of an Ageing Population for the UK Economy

In this paper the likely development of aggregate living standards in the United Kingdom over the course of this century are considered, and some of the risks to this outlook. It is argued that even under relatively cautious assumptions about technological progress and capital accumulation, aggregate living standards (as measured by GDP per head) are set to double over the next 50 years. While there are clear risks to this aggregate outlook, these would be present even without demographic change. The risks to the living standards of individuals and individual cohorts are also discussed. These risks have changed in three main ways as a result of demographic change. First, ageing has been a factor throughout the world in encouraging a shift from public to private provision for old age, increasing the proportion of retired people exposed to risks to market prices and rates of return. Second, the size of the group exposed to such risks is growing larger as a direct result of ageing. Third, any adverse effects of demographic change are most likely to be felt in old age; one of the effects of people living longer is that they have to spread their lifetime incomes over more years of life, implying a need for more saving when working. If this does not occur, then consumption has to be considerably lower in old age than would have been the case had proper provision been made for retirement.

Social Protection and Economic Integration

In the past two decades of the 20th century, governments around the world began to apportion greater responsibility for old-age income provision to individuals and market forces through the privatization of pension systems. This article examines the political and economic foundations of the turn to private pension systems through a quantitative analysis of 57 countries around the world. I offer a causal model to explain the likelihood and degree of pension privatization based on the unique incentives and constraints created by domestic political and economic structures in each country. I show that the likelihood and degree of structural pension reform are shaped by the cost of the existing pension system, political party structures, domestic investment and debt levels, and geopolitical networks.

“The old woman's wish”: widows by the family fire?: Widows' old age provisions in rural England, 1500–1700

This article considers the extent of changes between 1500 and 1700 in the provisions for widows in the wills from two villages in the east of England (Cratfield and Poslingford in Suffolk). Will-makers were by no means a homogeneous group but had more in common with each other than they did with the poor. The stage in life reached by both the testator and his widow helped determine the type of old-age provision received and the degree of involvement with the estate. The existence of young children proved to be not as an important factor in the decision-making process as either age or social status. Some widows received land from husbands who had been yeomen; other received goods. Older testators favored annuities and similar arrangements, while younger testators (under 60) preferred a division of property between the widow and at least one son. When there were minor children, the widow was more likely to be awarded all or part of the landed estate. Over time, greater reliance upon cash and credit created a more fluid and responsive range of old-age provisions but did not completely replace traditional forms of support.

Vom Lohnarbeiter zum Shareholder?

The paper investigates the impact of some features of the 90s in Germany: shareholder-value orientation and changes in the distribution of share capital, booming asset prices, profit-sharing schemes including option plans, increased capital funded old-age provisions. Two propositions are discussed and, finally, denied: Due to these trends there might emerge a tendency towards a more equal distribution of capital stocks, and a relevant portion of employees might turn out as shareholders with considerable non-wage income. However, despite severe shortcomings in the data base a wave of further wealth concentration can be observed, and the workers´ share in capital assets has remained insignificant, apart from a small but increasing stratum of middle and high income employees.

Liberalism with a Vengeance?: Three New Books on Social Policy in New Zealand

Two of these books were commissioned by the New Zealand Department of Social Welfare to mark the centennial anniversary of the introduction of old-age pensions in 1898. But of course all three studies are also part of the avalanche of historical literature on the development of social policy around the world that has been generated by the world-wide fiscal crisis of social policy and the New Right assault on the welfare state. All three are part of the attempt to come to terms with what has happened to the postwar vision of the welfare state. Taken together, and building on the work of Margaret Tennant, Francis Castles, Linda Bryder, and others, they paint a striking and conceptually coherent picture of the grand trajectory of change over social policy in the past century. David Thomson's slim, focused study of provision for old age before the emergence of the welfare state sets the scene with admirable economy and clarity. In the opening pages of the book, Thomson accuses New Zealand historians of having too neatly organised their narratives of the nation's history around the pre-history of the welfare state; what could not be fitted into that pattern was 'ignored or dismissed as fading remnants of a passing, cruder, less generous society than our own.' His own book, in contrast, is a pre-history of the leaner, meaner New Zealand of the 1990s. Colonial New Zealand, he argues, was a kind of social laboratory for anti-welfare liberalism. The colonial state founded its early social policy on the ideal of self-reliance, and on an abhorrence of dependence on the public purse. Repeated revisions of the law on destitute persons extended the obligation to support the needy to an ever wider circle of relatives. To help those without family, the state encouraged private philanthropy, or subsidised local relief agencies; the state itself gave assistance to the needy only reluctantly, through hospitals and charitable aid

Umlagefinanzierung als Humankapitaldeckung: Grundrisse eines erneuerten „Generationenvertrages“ / Pay-as-you-go Public Pension Schemes Revisited: A Draft

Zusammenfassung Betrachtet man umlagefinanzierte Alterssicherungssysteme im Mehr-Generadonen-Zusammenhang, so erweisen sie sich als Varianten eines allgemeinen Humankapital-Deckungsverfahrens. Die Tatsache, daß dieser grundlegende Zusammenhang bei der Ausgestaltung der meisten Umlagesysteme zur sozialen Alterssicherung nicht berücksichtigt wurde, könnte zu gewichtigen Teilen die gegenwärtige Krise dieser Systeme erklären. Ausgehend von dieser Einsicht skizziert der Beitrag das Modell eines neuen „Generationenvertrages“. Im Kern basiert dieses Modell auf einer expliziten Verknüpfung des Rentensystems mit der privaten und öffentlichen Finanzierung von Kosten der Erziehung und vor allem der Ausbildung von Kindern. Die wichtigsten Vorteile einer solchen Lösung liegen in der Beseitigung demographischer Risiken bei der sozialen Alterssicherung, in der Schaffung korrekter Anreize für Entscheidungen zu Altersvorsorge und Humankapitalbildung und nicht zuletzt in der Einlösung recht komplexer Gerechtigkeitsideen.