Pension Products Research Articles

Trends in the development of the practice of using accumulative mechanisms of pension provision in OECD countries

The relevance of the study of issues related to the development of the practice of using pension provision accumulative mechanisms is out of question due to the challenges faced by pension systems of countries around the world. The research methodology is based on economic and mathematical tools for processing data characterizing the indicators of using accumulative mechanisms of pension provision in OECD (Organization for Economic Cooperation and Development) countries. The paper defines groups of OECD countries depending on the supplier of pension products, as well as the type of pension plan. Based on the analysis of data on the use of pension plans depending on the above factors, the author identified the countries-leaders in each of the identified groups. Based on the results of the study, a list of key trends in the development of the practice of using accumulative mechanisms of pension provision in OECD countries was formulated. The largest group of countries included those states where contracts for pension products are concluded mainly with non-state pension funds. Among the results obtained, it is necessary to highlight the lack of parity in the application of all types of pension plans supplied by non-state pension funds, since the dominance of any one of the types is recorded in each state. The results of the study will have practical significance when implementing substantiations of state decisions on issues of regulating the practice of using accumulative pension mechanisms as an integral component of the pension system of the Russian Federation. This is especially important in the context of achieving the national goals of the development of the Russian Federation for the period up to 2030, implementing the Strategy for the Development of the Pension System of the Russian Federation for the period up to 2030 and the Strategy for the Development of the Financial Market of the Russian Federation until 2030.

What drives the growth of an open pension fund?

Abstract This paper investigates the relationship between growth and quality of pension funds. It measures growth in terms of changes in the number of participants and cash flow transfers and appreciates the quality of the funds through the set of information on past results and costs published in the official prospectuses. The results show that growth rewards the best performing funds in the long term, while annual performance and costs have no relevance. Nevertheless, other factors, such as market power and commercial pressure, appear to be more powerful. The existence of conditions of market power capable of attracting investors beyond the actual quality of pension products is undesirable as it harms future pensioners. These results have implications for the Authority, as mandatory information should be suitable to induce investors to identify the best products and direct individual choices toward the public objective of a more efficient market.

Analysis of Optimizing the Allocation of Chinese Family Pension Financial Assets

In this era of national aging, social pension insurance can no longer meet the accelerated aging rate. According to statistics, by the end of 2021, the number of elderly people aged 60 and above in China had reached 267 million, accounting for 18 9% of the total population. In 2021, the number of elderly people aged 60 and above in China had reached 267 million, accounting for 18.9% of the total population. It is expected that by 2035, the elderly population will reach 300 million, accounting for 20% of the total population. In 2035, the elderly population will reach 300 million, accounting for 20% of the national population. Due to outdated concepts, the older generation believes that storing money in banks is not a good idea. In order to solve this problem, the country has promulgated the "Personal Pension Implementation Law", which is a type of pension insurance that individuals bear. Due to outdated concepts, the older generation believes that storing money in banks through real estate is safe and lacks correct financial management views. Therefore, the development of pension finance is difficult to implement, especially the understanding of that financial knowledge is needed for the allocation of pension products. To solve the development problem of elderly care finance, it is necessary to first improve the financial concepts of the old so that they can understand the correct financial concepts. Therefore, we will explore the understanding of financial concepts and elderly care allocation among the elderly in China and demonstrate it through data. Therefore, we will explore the understanding of financial concepts and elderly care allocation among the elderly in China and demonstrate it through data. Then, we will combine the theories of some financial scholars to conduct research, hoping to discover the problems of elderly care asset allocation in China through research and propose some of our own opinions.

Efficient simulation and valuation of equity-indexed annuities under a two-factor G2++ model

Equity-indexed annuities (EIAs) with investment guarantees are pension products sensitive to changes in the interest rate environment. A flexible and common choice for modelling this risk factor is a Hull–White model in its G2++ variant. We investigate the valuation of EIAs in this model setting and extend the literature by introducing a more efficient framework for Monte-Carlo simulation. In addition, we build on previous work by adapting an approach based on scenario matrices to a two-factor G2++ model. This method does not rely on simulations or on Fourier transformations. In numerical studies, we demonstrate its fast convergence and the limitations of techniques relying on the independence of annual returns and the central limit theorem.

Effect of Diversification on Uptake of Pension in Uasin Gishu County, Kenya

Pension schemes have gained popularity globally, leading to exponential growth and establishment in developed countries. Nevertheless, the uptake of pension products is marked by a lack of appropriate investment vehicles, limited market liquidity knowledge, and poor expertise about these investments and their associated risks. Therefore, the purpose of the study was to investigate the effect of diversification on the uptake of Pensions in Uasin Gishu County. This was because there was a relatively low uptake of pensions in the region. The study employed an ex-post-facto research design. The target population of the study was 159 employees working in the Pension Institutions in Uasin Gishu County, Kenya. A simple random sampling technique was employed to select a sample of 114 employees from all the pension institutions in Uasin Gishu County. A questionnaire was adopted as the data collection instrument. Data collected were analyzed by using descriptive and inferential statistics. Multiple Regression Analysis was employed to test the hypotheses. The study established a positive relationship between diversification (p=0.000) with a contribution of 63.5% and uptake of pension products. The study commended that the Pension Institutions in Uasin Gishu County should devise products that fit the informal sector as a way of promoting the uptake of Pension Institutions in Uasin Gishu County. The study also commented that the pension institution should diversify their products to include more affordable products such as daily submission of savings via mobile phones.

Financial literacy and financial advice seeking: Does product specificity matter?

We study the effect of financial literacy on financial advice seeking. We test the relationship across different measures of the former and the latter, providing a contribution to the existing literature. Overall results suggest complementarity, but when considering product-specific financial literacy and financial advice seeking, a complementary effect emerges for investments and debt, while a substitution effect prevails for insurance and pension products. Financial advising services can therefore compensate for the lack of financial literacy in insurance and pension planning in the short run. Conversely, greater policy efforts are needed for investment and loans, where poor financial literacy translates into a scarce demand for financial advice.

Complex pension products: A multidimensional approach

Abstract The study analyzes and assesses the economic and linguistic complexity of individual retirement products in Poland. For this purpose, an original multidimensional approach was used and various research methods were applied. We analyzed 75 out of 86 individual pension products (IKEs and IKZEs) offered in Poland in the first half of 2017, covering our analysis of nearly 90% of Poland’s market of individual pension products. We performed the nonparametric Spearman’s rank correlation analysis, we used hierarchical cluster analysis, analysis of variance, and a chi-square test to verify if there was a statistical relationship between the clusters and the type of financial provider and the type of individual pension product (IKE or IKZE). We also built also a map of the products that shows their economic and linguistic complexity. We find that high-fee products tend to have the most complex fee systems, suggesting that the complex fee system may be a strategy used by the providers of individual retirement products. Our results also indicate that individual retirement products are too complex for most individuals.

Strategi Pemasaran Dana Pensiun dalam Meningkatkan Pruduk Pensiun pada Bank BSI KCP Jember Gajah Mada

The purpose of this study was to determine how the marketing strategy of Islamic pension fund products at Bank Syariah Indonesia and what obstacles are faced when marketing pension fund products to the people of Indonesia, This marketing strategy is structured based on what to do, who does it, and when to do it. The marketing strategy used by Bank Syariah Indonesia KCP Jember Gajah Mada in increasing sales of pension products is to use promotional approaches and strategies. This approach to customers can increase the long-term growth of Bank Syariah Indonesia KCP Jember Gajah Mada and maximum customer satisfaction. After conducting the approach process, the next stage is the promotion strategy. Promotion is an activity that aims to convey information about pension products to customers, so that these pension products are known and can encourage customers to use them. Promotion is also very useful for providing information about the advantages or disadvantages of these pension products. The method used in this research is a qualitative research method, namely by making observations to the research location, conducting interviews with Bank Syariah Indonesia employees and collecting data from various sources related to this research. It is hoped that from the results of this research, Bank Syariah Indonesia can market its products in accordance with the wishes of the Indonesian people who make transactions safely, comfortably and blessedly.

Protection of EU Consumers Vis - À - Vis Pension Products: the Dutch Case: Towards a New Regime

Protection of EU Consumers Vis - À - Vis Pension Products: the Dutch Case: Towards a New Regime

Investigating Trade-Offs in the Design of Smooth Pension Products

Investigating Trade-Offs in the Design of Smooth Pension Products

Does the Pan‑European Personal Pension Product Suit All? Its Perspectives in the EU Member and Candidate Countries

This article aims to verify the development prospects of the Pan‑European Personal Pension Product (PEPP) in the European Union (EU). It focuses on the relationship between the quality of domestic public pension schemes and household savings for old age in the EU member and candidate countries. The study was conducted in two stages. The first stage examined the interrelationship between public pension schemes and household savings based on Pearson’s correlation coefficients. In the second stage, sub‑samples of countries with high and low‑quality public pension schemes were identified using hierarchical cluster analysis. The results showed significant links between households’ obligatory and voluntary saving for retirement in both samples. However, the study recognised the internal diversity of countries in terms of households’ preferences for the types of financial assets. Based on these findings, conclusions about the development potential of PEPP are drawn. The best prospects are identified for Croatia, Cyprus, France, Greece, Hungary, Poland, Portugal, Romania, Slovenia, Spain, and Turkey. In most of these countries (except for France, Hungary, Romania, and Spain), the PEPP could serve as an alternative to household liquid assets. However, in Croatia, France and Italy, it was recognised as competing with existing domestic retirement and life insurance products, which may negatively impact its development. This is the first comprehensive study of the prospects of PEPP in a large group of countries. The results provide socially essential knowledge as they address the role of private savings in supplementing households’ future income from public pension schemes, considering the availability of a new product such as PEPP.

Exploring Determinants of Desire Towards Enrolling in Contributory Pension: Evidence from Self-employed and Informal Sector Workers of Sri Lanka

Social security is an essential mechanism for reducing old-age poverty and improving the living standards of vulnerable individuals. One such social security instrument is the contributory pension scheme. This study aims to identify the determinants of self-employed and informal sector workers’ desire towards enroll in a contributory pension scheme offered by the State. A simple random sampling technique was employed to select respondents. Face-to-face interviews were conducted with 300 participants using a semi-structured questionnaire in the Kurunegala district of Sri Lanka. A multivariate logistic regression model was used to examine associations between the independent variables and the desire towards enroll in a contributory pension scheme.The results revealed that female workers, never married and divorced /widowed, individuals in middle-age, having an average education, those with fewer dependents, individuals with middle incomes, and workers with fair financial literacy have a greater probability of enrolling in a contributory pension scheme. Enhancing financial knowledge, promoting financial inclusion, and reducing various structural barriers to pension schemes can significantly foster the retirement planning behaviour of these workers. It is important to encourage target workers, in general, to enroll in a pension scheme, restore confidence in it, and ensure its sustainability. The findings of this study would be beneficial for the development of pension products, particularly to motivate self-employed and informal sector workers to enroll in a contributory pension scheme.

Saving for retirement in Europe: the long-term risk-return tradeoff

AbstractA comparison of the performances of pension products that ignores long-term trends might significantly overestimate the long-term impact of volatility risks while underestimating the impact of persistent, low-frequency trends. This paper proposes a comparison making use of projection models based on the long-term risk–return tradeoff proposed by Campbell and Viceira (2005) to explicitly take into account slow-moving economic trends. In order to illustrate the approach and its implications, we discuss the capital protection provided by life-cycle target-date fund strategies and minimum guarantee strategies.

Stated Product Choices of Heterogeneous Agents are Largely Consistent with Standard Models

In this paper we analyze how stated choices for the amount of risk in pension assets of Dutch participants in DC pension products vary with their characteristics. We find strong evidence that this variation is in line with standard portfolio choice models. Heterogeneity in age, risk aversion, loss aversion, non-pension financial wealth, the relative importance of DC pension wealth and educational attainment leads to differences in product choice that are largely in line with standard theory. This applies to investment choices in the accumulation phase as well as in the retirement phase.

노후 위기를 맞이하는 개인의 연금 가입 현황과 시사점

This study investigates the factors that affect the retirement preparation strategy of the elderly in the current situation where retirement preparation strategies can be established with various financial products. Using the data from Korean Retirement and Income Study (KReIS), we analyze the current status and determinants of the appropriate cost of living for old age, the level of preparation for old age, and subscription to pension products judged by individuals. We found that individual characteristics, income characteristics, household characteristics, and occupational characteristics were influenced to individual retirement preparation strategies. In particular, the higher the level of education and income, the higher the possibility that an individual's reasonable cost of living in old age is higher, the possibility of preparing for old age, and the possibility of joining an annuity product. What is noteworthy is that the capital market environment has been created so that individuals can establish optimal retirement preparation strategies through the development of various financial products, but only a small number of people use them.

Readability and Clarity of Individual Pension Product Contracts

The study analyses the readability and clarity of economic specialised texts on supplementary individual pensions. The research includes agreements on individual pension products available on the Polish market at the beginning of 2017. The level of comprehensibility of language has been assessed using the “Jasnopis” application, based, among others, on the FOG index, while the structure of the content of the agreements has been assessed by an expert linguist (the expert linguist is one of the authors of this and a number of other publications on clear and understandable texts). In addition, one of the texts was subject to a survey, the so-called cloze text, which provided more accurate information about readability for a specific reader group. The results obtained allow the conclusion that the language of agreements on individual pension products is very difficult and their understanding requires higher education or expertise in the field of finance.

Investigating the intention of purchasing private pension scheme based on an integrated FBM-UTAUT model: The case of China.

The newly established private pension scheme in China has received great attention as it would be an important supplement to China's social safety net and corporate annuity amid an aging population. It provides a way of helping to address the challenge of ensuring adequate retirement income, and the scheme is expected to grow significantly in the coming years. This study investigates factors affecting the intention of purchasing the private pension scheme using a conceptual model based on the integration of Fogg Behavioral Model (FBM) and Unified Theory of Acceptance and Use of Technology (UTAUT) model. The questionnaire-based data from a sample of 462 respondents had been analyzed. Both exploratory factor analysis and confirmatory factor analysis were used to assess validity. The hypothesized relationships in the integrated FBM-UTAUT model were tested using structural equation modeling. The research findings indicate that anticipation, social influence, effort expectancy, performance expectancy, side benefits and facilitating conditions have significant positive impacts on intention to purchase. According to the exploratory factor analysis, the integrated FBM-UTAUT model can explain more than 70% of the total variance. Meanwhile, effort expectancy can be affected by time effort, thought effort and physical effort collectively, while performance expectancy can be affected by risk and trust. It is revealed that the integrated FBM-UTAUT model can be effective in explaining purchase intentions in a private pension scheme context, and this study is expected to offer helpful advice on the design of pension products and the reform of pension policies.

Development of capital pension funds in the Czech Republic and Bulgaria and readiness to implement PEPP

Unfavourable demographic trends are exerting more pressure on public pension systems in all European countries, and the need for alternative sources of pension provision is increasing. Personal pension products can be considered as a possible solution to the problem of providing adequate pensions. The pan-European personal pension product (PEPP) is the first standardised pension product subject to a uniform EU regime. Now that the regulatory framework for PEPP has been established at the EU level, it is up to the Member States to create an appropriate legal environment in order to promote the successful development of PEPP. This article examines the role of voluntary pension funds and the readiness to implement PEPP in the selected countries. We focus on the Czech Republic and Bulgaria, where the role of private pension funds is growing. We examine how PEPP can fit into the national pension systems and make some proposals regarding regulatory measures to be taken in order to ensure that PEPP is not at a competitive disadvantage against national pension products. We find that PEPP may fill the pension gap in countries where public pensions are the main source of retirement income and the role of occupational pension schemes is insignificant.

Pension tracking system application: A new supervision challenge in the EU

Different areas serve as sources of pension protection for the citizens of the European Union. Along with pensions from public systems, capital pensions are playing an increasing role. Financial institutions-providers of pension savings products operate on a different business model; the diversity cause difficulties in tracking individual’s pension savings, and in promoting pension protection. The pension tracking system is seen as a mechanism for achieving a more efficient market for pension products. This paper examines the development of the pension tracking system (PTS) for European Union member states with multi-pillar pension system. We study the application of the PTS in Bulgaria, to exemplify the structure of the PTS for other EU member states. We conclude that the development of PTS is a necessary set of measures that would be a prerequisite for improving the well-being of the savers.

Implications of IFRS 17 in European financial stability: accounting methodology and evaluation modelling

The purpose of this document is to provide an overview of IFRS 17 and its possible practices according to a context analysis conducted by EIOPA and ESMA. Furthermore, the implications of the standard will be evaluated with respect to a traditional life and pension products. This requires a deeper insight into the standard, the construction of fictive insurance product and the determination of measurements techniques. With the recent release of the standard, IFRS 17 is unexplored to many within the insurance industry. Thus, the effects of the standard on the financial statements of insurance companies and strategies for reaching objectives such as profit smoothing are yet unknown. Furthermore, the standard is principle based and does hence not specify a practice. Therefore, to determine a practice that complies with the standard and enables achievements of desired objectives is vital. In conclusion, IFRS 17 is expected to bring substantial benefits to financial stability in the EU, mainly through the transparency channel; the requirements in IFRS 17 may push insurance corporations to improve internal processes, including enhancing their internal risk management frameworks.