Pension Entitlements Research Articles

Trends in the retirement security of Black and Hispanic households in the US: A setback for Black Americans but continued progress for Hispanics

Retirement income security refers to the ability of households to provide an adequate stream of income during the period of their retirement from the labor force. Expected retirement income is based of four components: (i) standard non-pension wealth holdings, (ii) defined contribution (DC) pension holdings, (iii) actual or expected defined benefit (DB) pension entitlements, and (iv) actual or expected Social Security benefits. The first two components are converted into an annuity. All the data (except rates of return) for these calculations are available from the Survey of Consumer Finances. Results indicate that both Black and Hispanic households made remarkable progress in terms of mean and median retirement income, poverty reduction, and replacement rates from 1989 to 2007 in both absolute terms and relative to whites. However, for Black households, this was followed by a reversal of fortune from 2007 to 2019, with expected median retirement income declining, the projected poverty rate rising, and the projected replacement rate falling, though expected mean retirement income does rise. Hispanics also experienced a setback in mean retirement income but continued progress in replacement rates and reducing poverty from 2007 to 2019.

Elite Athletes and Worker Status

Abstract Recent research regarding the working conditions of elite athletes in Olympic sports in the European Union, Norway and the UK shows that most athletes are not in an employment relationship with a sports stakeholder such as a National Olympic Committee, sports governing body or club because legislation at a national level or the terms of a contract preclude their status as employees or workers. Elite athletes who are excluded from employee or worker status do not have access to valuable social and employment benefits and protections, for example, a pension entitlement or maternity benefits. This article highlights the complex contractual situation of elite athletes who are integrated into a national elite sports programme and the regulatory and legal frameworks in which they provide services during an athletic career and posits that elite athletes are workers irrespective of an athlete’s legal status designated under national law or contract.

Financial Crisis, Confidence in Financial Markets and Participation in Private Pension Plans in Germany

The financial crisis of 2008/2009 has not only left its mark on the value of retirement savings, but also on savings and investment behaviour. It has led to a loss of confidence in financial markets and its main protagonists. However, trust is a key mechanism for savings and investment decisions. We illustrate the loss of trust by looking at the number of pension plans purchased in the years following the financial crisis. The paper is based on data of the study on ‘Life courses and old-age provisions’ (LeA, Lebensverläufe und Altersvorsorge). The data was gathered in 2016 and provides information on the life histories of people living in Germany who were born between 1957 and 1976, as well as on pension entitlements in all three pillars of the German pension system. The analysis concentrates on so-called Riester pension plans, the most dynamic private pension scheme in Germany. We estimate a panel fixed-effects logit model to examine whether the financial crisis had an impact on the participation in Riester pension plans. Results show that instead of a shock effect relating to the crisis years, we see a negative linear effect following the crisis.

Gender Disparities in Care Allocation among Informal Elderly Caregivers: A literature Review

To comprehensively understand of the informal caregiving experience, it is essential to conduct an in-depth investigation into the caregiving context, including gender, family dynamics, and the caregiver's cultural background. Among these factors, considerable research attention has been dedicated to examining the impact of gender on caregiving. The objective of this study is to scrutinize studies that explore the association between informal care and the well-being of caregivers, with a particular focus on gender disparities within the caregiving domain. A systematic literature retrieval was conducted by querying the Medline, Scopus, and Web of Science databases. The search strategy incorporated specific Medical Subject Headings (MeSH) terms, including "informal care", "caregiver", "health problems", "employment difficulties", "social problems", "gender", and "gender disparities". Earlier investigations into gender distinctions among caregivers for older adults have demonstrated a predominance of female caregivers, disparities in caregiving experiences, mental and physical health-related challenges, time allocation dedicated to caregiving, exposure to unpaid labor, inequalities in the distribution of unpaid work, caregiving responsibilities, and economic implications, including disparities in remuneration and pension entitlements. To promote gender equality and achieve a balance between family and work responsibilities for both men and women, there is a need to redistribute informal caregiving tasks between genders and between family and government entities. Key policy measures to address gender disparities in the provision of home care services at a national level can be grouped into four main categories: improving the quality, accessibility, and availability of long-term care; including gender considerations in the design and implementation of family leave policies and flexible work arrangements; removing economic barriers for caregivers' employment; and challenging traditional gender roles and stereotypes.

Intergenerational actuarial fairness when longevity increases: Amending the retirement age

Continuous longevity improvements and population ageing have led countries to modify national public pension schemes by increasing standard and early retirement ages in a discretionary, scheduled, or automatic way, and making it harder for people to retire prematurely. To this end, countries have adopted alternative retirement age strategies, but our analyses show that the measures taken are often poorly designed and consequently misaligned with the pension scheme's ultimate goals. This paper discusses how to implement automatic indexation of the retirement age to life expectancy developments while respecting the principles of intergenerational actuarial fairness and neutrality among generations of the respective policy scheme design. With stable demographic conditions, we show in policy designs in which extended working lives translate into additional pension entitlements, the pension age must be automatically updated to keep the period in retirement constant. Alternatively, policy designs that pursue a fixed replacement rate are consistent with retirement age policies targeting a constant balance between active years in the workforce and years in retirement. Under conditions of population ageing, the statutory pension age will have to increase at a faster rate to meet the intergenerational equity criteria. The empirical strategy employed a Bayesian Model Ensemble approach to stochastic mortality modelling to address model risk and generate forecasts of intergenerationally and actuarially fair pension ages for 23 countries from 2000 to 2050. The findings show that the pension age increases needed to accommodate the effect of longevity developments on pay-as-you-go equilibrium and to reinstate equity between generations are sizeable and well beyond those employed and/or legislated in most countries. A new wave of pension reforms may be at the doorsteps.

Permanent and transitory earnings dynamics and lifetime income inequality in Sweden

This paper studies the role of permanent- and transitory earnings variability for lifetime income inequality in Sweden. We fit a permanent–transitory error component model to the autocovariance structure of earnings using administrative data for 2002–2015 and minimum distance estimation. We find that permanent earnings inequality increased during the first decade and that the financial crisis of 2008 temporarily heightened earnings volatility. Using this model, we simulate pension entitlements and study lifetime income inequality conditional on the pre- and post-1990s pension system. We find that permanent earnings differences generally contribute the most to lifetime income inequality. We conclude that the Swedish pension system provides some insurance against earnings risk, but accentuates the role of permanent earnings differences in explaining lifetime inequality.

Accounting for pension wealth, the missing rich and under-coverage: A comprehensive wealth distribution for Germany

This study constructs a comprehensive wealth distribution for Germany to inform debate in Germany and internationally on the distribution of wealth including pension entitlements. We estimate the net present value of pension wealth in Germany in 2012 and 2017 using Socio-Economic Panel (SOEP) data. When including pension wealth, German households’ wealth-income ratio increases from 570% to 850% in 2017; the wealth share of the bottom 50% increases from 2% to 9%; and the wealth share of the top 1% declines from 30% to 20%.

Caught in a Matrix of Factors: A Pilot Study of Female Retirees Receiving Below-Minimum Pension Payments

Pension systems based on an insurance model were originally designed for male breadwinners who worked under permanent contracts without career breaks. Since their inception, women’s participation in the workforce has increased significantly, but on average, their employment career paths are still shorter and less linear compared to those that men enjoy. Demographic changes have prompted many countries to reform their pension systems to ensure long-term financial sustainability. And to varying degrees, such reforms also have looked to address the issue of short careers. In Poland, reforms introduced in 1999 brought about significant changes to the rules governing pension entitlement. That led to the emergence of a new category of retirees—those who had contributed to the pension system for a short period and consequently received very low pensions. This article provides an overview of an exploratory qualitative pilot study conducted in 2018 with nine women who were in receipt of benefits from the Polish universal pension system, which amounted to less than the so-called ‘lowest retirement pension’ being granted at that time. The analysis makes recourse to the concept of employment career and its connection to retirement to identify various life-course determinants that contributed to their situation. These factors include childhood and adolescent adversities that affected educational attainment; domestic and caregiving responsibilities coupled with cultural expectations and insufficient institutional support; the labor market situation, and the inability to document certain employment periods. The research material indicates that a significant portion of the work performed by the interviewees throughout their lives did not translate into a pension benefit, as it either involved unpaid domestic and caregiving duties; or work performed without formal contracts.

Gender Pension Gap in EU Countries: A Between-Group Inequality Approach

Pension entitlements are influenced by individual career paths and labor market conditions, which often result in gender-based disparities. Women face several challenges during their working lives, such as late entry into the labor market, the gender pay gap, discontinuous working careers, and early retirement due to family caregiving, which lead to lower pension incomes. This paper investigates the gender pension gap in nine European Union countries from 2004 to 2020. Our study adopts a non-parametric estimation strategy that utilizes additively decomposable inequality measures to provide a more informative perspective on gender inequality. We aim to demonstrate that this approach surpasses the standard gender gap in pension index in capturing between-gender inequality in societies. Employing data from the SHARE database, we find that gender inequality in the studied countries is decreasing on average, with a convergence trend observed from 2011 onwards. This study contributes to a more comprehensive understanding of the gender pension gap phenomenon, which is crucial for developing effective policy responses in a welfare perspective.

Family-provided long-term care and its coverage in European pension systems

Objective: In this contribution, the question is raised in how far family care work is covered in the social rights of European welfare states, focussing on pension entitlements for family-provided long-term care. Background: Old-age pensions are the major redistributive system of present-day societies. Central to current discourses on pensions and their reforms is the relevance of work as paid employment for building up pension rights. Family care work is largely disregarded, although established welfare states broadly cover also this work form in their pension systems. Method: By applying the SCQual method, this article systematically quantifies current pension entitlements for family-provided long-term care in ten European countries, and their change. It reflects on the results by means of testing assumptions drawn from the most relevant research strands in the field and contributes to contextualising cross-national variation and change. Results: The results show that pension entitlements for family-provided long-term care are found in most of our study countries, and that all the assumptions deduced from the literature, with regard to both cross-national variation and change in entitlements, are refuted by the empirical findings. Conclusion: This study contributes to both the conceptual challenges of comparative welfare state research in general, and the concrete analysis of social rights entitlements. These are based not only on paid employment, but in most European countries also on family care work, as has been shown here. The conceptual differences and changes are fruitfully addressed in this contribution.

Labor, Arms, and Homes

Abstract Financial, work-based contributions underly entitlement to pension benefits in Israel. This article examines the historical development of the pension system in Israel, including the pensions of long-term military veterans and Jewish immigrants, expanding the notion of ‘contribution’ beyond its initial meaning of work-based financial accumulation. Specifically, it shows that both before and after the erosion of the union-protected contributory rationale in the 1990s, an alternative path to pension entitlement has operated through non-financial, political-symbolic contributions. The analysis emphasizes the importance of sectoral organizations for the broader analysis of social policy, and for understanding the structure of “social citizenship” and its discriminatory implications in Israel.

The impact of social security wealth on the distribution of wealth in the European Union

The ageing of society means that public pension systems are becoming increasingly important. This study evaluates the influence of public pension entitlements on wealth inequality among pensioners. A novel data source - the Eurosystem Household Finance and Consumption Survey – is used to compare the impact of the public pension system on wealth inequality in 19 European countries. Findings indicate that in all investigated countries, social security wealth reduces wealth inequality. Augmented wealth inequality is ca. 30% lower than private wealth inequality. This estimate refers to the population of pensioners, while in the whole population the equalizing impact of public pension systems may be weaker. Social security wealth mitigates not only wealth inequality measured at the country level, but also wealth inequality in the whole European Union.

Pension System for the Rural Areas in Actual Social and Economic Conditions in China

The article first describes and analyzes China's social support measures for rural population from 1950s to nowadays. It depicts the indistinct stages of pension system institutionalization from the time it appeared and up to the present. The major Chinese society peculiarity lies in a huge gap between standards of living in the city and in the country. It has its present characteristics due to the historical environment of official employment in Chinese villages and the previous absence of social and pension governmental support as its circumstances. In the study latent periods of switching from one pension form to the others are revealed. The fact is that China's social support measures for rural population has only history of one hundred years. However different pension forms replace each other dramatically during this time while special aspects of moral issues, family relations and social structures of Chinese society complicate the situation. Various aspects of rural pension policy in China are underexplored for that moment. The paper fills this important gap and gives much attention to its social, cultural and economical aspects. Evolution of Chinese rural pension policy starts from the "Five Guarantees" system, continues with the "Baoji model" and concludes with the "New Pension System" development. This system is to equalize rural and urban pension rights in China. In conclusion due to the National Social Policy only from 2014 every Chinese rural citizen aged 60 and older has pension entitlements. This fact can indicate that the primary maturity of China’s state pension system for old-age rural population has been reached.

Intergenerational consequences of gradual pension reforms

Balancing the government budget in an aging economy may require adjusting gradually pension benefits. Such policy change can take two forms: adjusting the accrual rate (the rate at which individuals built-up pension entitlements while working) or the indexation rate (the rate a which accrued entitlements are linked to nominal wage growth). We compare the consequences of such gradual policies across cohorts. We identify a fundamental generational trade-off between democracy and equality. In particular, we show that for Belgium, 80% of the population alive at the time of the reform prefers the accrual to the indexation reform, with the implication that the youngest half of the population would bear 85% of the total adjustment cost. The indexation reform provides more generational equality because the phasing in over time has larger base and thus benefit cut can be smaller per capita. We then consider other reforms improving the generational equality, showing that all those reforms fail to gain majority support. Finally, considering labor incentives, we show that the indexation reform is also more efficient than the accrual reform. Efficiency meets generational equality.

Pension Wealth and the Gender Wealth Gap

We examine the gender wealth gap with a focus on pension wealth and statutory pension rights. By taking into account employment characteristics of women and men, we are able to identify the extent to which the redistributive effect of pension rights reduces the gender wealth gap. The data for our analysis come from the German Socio-Economic Panel (SOEP), one of the few surveys that collects information on wealth and pension entitlements at the individual level. Pension wealth data are available in the SOEP for 2012 only. While the relative raw gender wealth gap is about 35% (or 31,000 euros) when analysing the standard measure of net worth, it shrinks to 28% when pension wealth is added. This reduction is due to redistributive elements such as caregiver credits provided through the statutory pension scheme. Results of a recentred influence functions (RIF) decomposition show that pension wealth reduces the gap substantially in the lower half of the distribution. At the 90th percentile, the gender wealth gap in net worth and in augmented wealth remains more stable at roughly 27–30%.

CONTRIBUTORY PENSION SCHEME: PANACEA FOR RETIREMENT WOES IN NIGERIA

Pension management in Nigeria seems to have assumed a serious concern to the citizenry especially retirees. Over the years, funding has been the major challenge that successive government had had to grapple with. This creates avoidable problems to retirees especially, government employees, whose pension entitlements are delayed or not paid at all before they die. This resulted in the introduction of Contributary pension scheme in 2004. Part of the reason for introduction of the scheme is to resolve the issues of paucity of funds, fraud and other governance issues that dogged the Defined Benefit Scheme (Old Pension Scheme). The new scheme, Contributory Pension Scheme, is a flee from this malaise and allows workers in the formal sector to contribute to the scheme, through their salaries, while the employer contributes a stipulated percentage by law into the scheme’s treasury called. The Retirement Saving Account RSA). The essence is to reduce the financial burden of funding retirement process which was solely borne by the employers but now shared by both employers and employees in the new arrangement (CPS). This paper examined the objectives of the scheme, its benefits and challenges. The paper, however, concluded that the pension scheme is a robust, safe and dependable packaged for retirees. The paper, therefore recommended that, states, in collaboration with employers in the private sector should emphasize on the scheme to ameliorate the suffering of workers and eradicate poverty at retirement.

The gender pension gap in Germany: is divorce a gender-equaliser?

AbstractGermany is one of the few countries in Europe that has implemented a system of ‘divorce splitting’. Under this system, the pension credits that spouses have accumulated during their marriage are combined and then split equally between them upon divorce. This study examines how divorce affects public pension entitlements in Germany, and how these patterns are influenced by the system of divorce splitting. The data for our analysis comes from SHARE-RV, a direct linkage of the Survey of Health, Ageing and Retirement in Europe (SHARE) with administrative data of the research data centre of the German Pension Insurance Fund (Deutsche Rentenversicherung Bund). The data include information on the beneficiaries’ monthly earnings and employment biographies, as well as on their pension entitlements and the credits they received through divorce splitting. The results of the analysis, which was restricted to West German men and women born between 1935 and 1954, reveal that there are large gender gaps in public pension benefit levels. However, the investigation also shows that single and divorced West German women have larger personal pension entitlements than their married or widowed counterparts. Furthermore, the public pension entitlements of divorced men and women in West Germany are very similar. This can be attributed partially to the divorce-splitting system, which tends to increase the pension benefits of divorced women, while reducing the pension benefits of their male counterparts.

The Declining Pension Wealth of Employment for the Birth Cohorts 1935–1974 in Germany

Abstract Social inequality in the labor market leads to similarly unequal pension entitlements. From a life-course perspective, however, there are two components of inequality in the labor market: the degree of stability of employment until retirement, as well as the amount of gross income earned in periods of employment. The following analysis focuses on working-life and income trajectories of the birth cohorts 1935–1974 in East and West Germany until age 40. The results demonstrate a structural shift in the German labor market towards less stable employment in the first half of the working career. The labor market therefore offered increasingly less stable employment, with an especially stark negative trend for East Germans. Only West German women born after 1945 experienced a positive trend in employment stability. For employees of all birth cohorts, the analysis demonstrates that instability in the employment career has a strong negative effect on income and, subsequently, on pension wealth. The impact of income discrimination against those with less employment stability thus remained similar for the later-born despite the more widespread experience of employment interruptions.

A FEW WORDS ABOUT FAMILY PENSION, FAMILY EMOLUMENT AND PROPORTIONALITY OF THE BENEFIT

Family pension entitlement applies to children up to the age of 25. If the subject has reached this age in the last year of studies in a higher school, family pension entitlement extends until the end of studies. The problem is the interpretation of the phrase ‘in the last year of studies in a higher school’. It is unknown whether its meaning is limited only to the higher education (up to master’s degree) or whether it covers all forms of studies conducted by a higher school. Extending the meaning of this phrase shall cause the category of children entitled to the family pension to enlarge significantly, because entitled shall be those children who are students as well as those who take up postgraduate or doctoral studies. Such an interpretation seems to go too far. The conditions for acquiring the right to a family emolument after the deceased performing the profession of the judge also need to be specified.

Linking Pensions to Life Expectancy: Tackling Conceptual Uncertainty through Bayesian Model Averaging

Linking pensions to longevity developments at retirement age has been one of the most common policy responses of pension schemes to aging populations. The introduction of automatic stabilizers is primarily motivated by cost containment objectives, but there are other dimensions of welfare restructuring in the politics of pension reforms, including recalibration, rationalization, and blame avoidance for unpopular policies that involve retrenchments. This paper examines the policy designs and implications of linking entry pensions to life expectancy developments through sustainability factors or life expectancy coefficients in Finland, Portugal, and Spain. To address conceptual and specification uncertainty in policymaking, we propose and apply a Bayesian model averaging approach to stochastic mortality modeling and life expectancy computation. The results show that: (i) sustainability factors will generate substantial pension entitlement reductions in the three countries analyzed; (ii) the magnitude of the pension losses depends on the factor design; (iii) to offset pension cuts and safeguard pension adequacy, individuals will have to prolong their working lives significantly; (iv) factor designs considering cohort longevity markers would have generated higher pension cuts in countries with increasing life expectancy gap.