Pension System Research Articles

Severance savings accounts and life-cycle savings

Severance savings accounts (SSA) is an important government program aimed at protecting laid-off workers and stimulating savings. We analyze the distributive and aggregate effects of SSA in a rich life-cycle model with heterogeneous agents and incomplete markets. The model is estimated to be consistent with micro and macro data from Brazil. Our analysis reveals that, despite a decrease in voluntary savings, the policy expands aggregate savings, output, and wages, leading to long-run welfare gains. We show that although better risk sharing is important for our findings, the bulk of the gains come from improved efficiency as labor productivity increases and labor supply is reallocated towards highly educated workers and the early stages of the life cycle where agents are generally poorer and leisure is less valued. Interestingly, most of the gains we find accrue to less educated agents as the distribution of this group is skewed towards the informal sector, and they do not directly incur the additional burden from the increase in contributions. We also explore an alternative policy design in which households are allowed to access their severance savings accounts only after retirement, as in a defined contribution pension system. We find that despite greater uncertainty in medical costs later in life, households prefer a more flexible system that provides access to the SSA fund during working-age and after retirement.

PENSIONS, INCOME TAXES, AND HOMEOWNERSHIP: A CROSS‐COUNTRY ANALYSIS

AbstractThe article studies the role of pensions and income taxes in determining homeownership. We develop a stochastic, overlapping generations model with tenure choice and heterogenous skill types calibrated to Germany. Then, we simulate alternative income tax and pension policy structures from the United States and Australia, since these developed nations have similar incomes per capita, but highly different homeownership rates. Our results highlight that the pension system and its financing have decisive long‐term effects on homeownership. The latter is even more significant than income tax, where labor and capital income taxation affect homeownership in opposite directions.

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.

Reforming the Dutch pension system to ensure sustainability

AbstractThe Netherlands is on the brink of reforming its system of occupational pensions as part of a more general reform of its three‐pillar pension system. This reform features important changes to first pillar pension benefits. The focus of this article is however on the coming reform of occupational pensions, the second pillar of the system, which concerns both pension contributions and benefits. This reform is related to a series of reforms that have gradually transformed the pension contract that was dominant 20 years ago, a final salary defined benefit contract, into a collective defined contribution contract. We argue that these reforms are a response to changes in the external environment, such as population ageing and a secular decline of interest rates. The coming reform responds to the call for a pension scheme that is more individualistic, more closely connected to the labour market, and which does not share interest rate risks between generations. The New Pension Contract remains in part collective, since the assets of participants are invested collectively, and a mandatory solidarity fund can be used for intergenerational risk sharing.

Trust in the pension system and housing investment

PurposeThis research contributes to the existing literature on the connection between trust and investment activities by exploring the effect of trust in the retirement system on dwelling investments.Design/methodology/approachThis study utilizes data including 28 OECD countries from 2009 to 2020, and employs panel fixed effects and GMM estimators.FindingsThe analysis reveals a negative relationship between trust in the retirement system and investment in dwellings. Notably, this is found to be more evident in countries that promote neo-liberalized welfare systems.Practical implicationsThe implications of our results are particularly relevant for policymakers and international construction firms.Originality/valueThe primary contribution of this paper extends the “trust–pension investment behavior” nexus. We explore whether individuals with diminished trust in the retirement system consider investing in the property market as an alternative means to safeguard their financial well-being during retirement.

Identifying Teacher Salary Spiking and Assessing the Impact of Pensionable Compensation Reforms in Illinois

Defined benefit (DB) pension plans incentivize “salary spiking,” where sharp increases in pay are leveraged into significantly higher levels of retirement compensation. While egregious instances of salary spiking occasionally make headlines, there is little guidance on the definition of salary-spiking behavior or understanding of its prevalence. We develop empirical methods to quantify the prevalence of salary spiking by identifying cases where end-of-career compensation deviates from the expected level of compensation. We apply this method to teacher pension systems in Illinois to assess the prevalence of salary spiking before and after the implementation of a reform designed to dissuade salary spiking.

Social security and pension trends. A bibliometric study

This article presents a bibliometric analysis of trends in pension studies in the field of social security, using Zipf's law, Lotka's law and the h-index. The research focused on identifying productivity and citation patterns and determining the main research themes and trends. Through term frequency analysis, it was observed that the words "pensions," "social security," and "sustainability" are predominant, confirming Zipf's law. Lotka's law was validated by finding that a small group of authors is responsible for most of the publications, indicating a concentration in scientific production. The h-index calculation showed that the most prolific authors are also the most cited, reflecting their influence in the field. Thematic trends reveal a shift from implementing pension systems towards sustainability and reforms for regime changes. Furthermore, the geographical distribution highlighted a high concentration in developed countries with increasing international collaborations. These findings provide a comprehensive overview of research dynamics and offer recommendations for future research and policies in social security

The Gender Gap in Pension Income for Urban Employees in China

Gender interests are crucial in the redistributive equity of the pension system. This paper investigates the gender gap in retirement pension incomes of urban employees in China by using data from the Chinese Household Income Project and decomposes the main factors contributing to the gender gap. We find that the pension income of female employees after retirement is significantly lower than that of male employees. Decomposition reveals that age, pre-retirement wage level, and type of work unit are the main factors contributing to the gender gap. Further, we find that the gender gap in pension incomes is lower for employees employed in the public sector than for those employed in enterprises, because enterprises are more affected by the market environment than the public sector, and female employees tend to suffer more market discrimination. In general, females still face the challenge of having significantly lower pension standards than males after retirement.

임원의 재무전문성이 퇴직연금 적립률에 미치는 영향

[Purpose] This study examines the impact of executives’ financial expertise on the funding level of defined benefit pension plans. On one hand, if executives with high financial expertise prefer to utilize available cash for more efficient investment options rather than locking it up in pension contributions, a negative relationship is expected. On the other hand, if executives with high financial expertise aim to increase the current funding level to alleviate future cash constraints or are concerned about negative evaluations in the capital market, a positive relationship is expected. The empirical analysis seeks to determine whether executives’ financial expertise lowers or raises the pension funding level. [Methodology] The sample for analysis consists of companies listed on the KOSPI and KOSDAQ from 2012 to 2022 that have adopted a defined benefit pension plan. Although the pension system was implemented in 2005, the initial period is excluded due to the low adoption rate of pension plans and the low funding ratio of defined benefit assets at the beginning of the system’s implementation. Executives’ financial expertise is measured by executives with keywords in their past careers such as finance, accounting, treasury, or CFO, and the pension funding level is measured by the ratio of pension assets to pension liabilities. [Findings] The empirical analysis shows that the higher the proportion of executives with financial expertise, the lower the pension funding level. This result can be interpreted as companies with executives having high financial expertise maintaining a lower funding level due to the high opportunity cost of investing available cash in pension contributions. Additionally, we find that the negative relationship between executives’ financial expertise and the pension funding level is driven by the subsample with a high funding level. [Implications] The results of this study provide evidence that for the pension system to act as a means of securing workers’ retirement income, an improvement in the return on pension assets is necessary.

Application of Time-Varying Mortality Rate Model in Pension System: A case of Tanzania

Application of Time-Varying Mortality Rate Model in Pension System: A case of Tanzania

The latest policies, practices, and hotspots in research in conjunction with the aging of Japan's population.

Population aging is a global concern, and Japan currently has the world's highest proportion of an aging population. In 2020, the population age 65 and over accounted for 10% of the global population, while this proportion was 29% in Japan, and it is expected to reach 38.4% in 2065. The average life expectancy in Japan in 2022 was 81.05 for males and 87.09 for females. At the same time, Japan's healthy life expectancy continues to increase, and it is increasing at a faster rate than the average life expectancy, with males expected to live 72.68 years and females expected to live 75.38 years in 2019. This is causing the social role of elderly people in Japan to constantly change. The Japanese Government continues to adjust its policy orientation, to improve the health level and social participation of the elderly, improve the accessibility of long-term nursing services and the treatment of nursing professionals, and improve the pension system. By 2025, one-fifth of people in Japan are expected to suffer from dementia. Japan has implemented a series of policies to create a dementia-inclusive and less risky society. The proportion of the population ages 65 and over living alone in Japan increased from 4.3% among males and from 11.2% among females in 1980 to 15.0% among males and 22.1% among females in 2020, representing a sustained increase. Changes in the composition of the population have prompted sustained attention to the personalization and diversification of elderly care. At the same time, Japanese researchers continue to utilize scientific and information technology to innovate elderly care products, improve the efficiency of elderly care, and provide intelligent elderly care.

Gender discrimination in retirement

The article aims to discuss the issues related to the nature of entitlements to retirement benefits in connection with the regulations relating to the retirement age and to consider existing and future changes in the regulations considering gender discrimination resulting from the different retirement ages of women and men. In particular, the existing regulations regarding the retirement age in Poland and Europe are presented. Based on Polish law, the history of changes and the dynamics of reforms related to the retirement age in national law are shown. The introduced pension reforms confirmed different retirement ages, which were eventually restored to age sixty for women and age sixty-five for men. The issues of the reasons for the changes and the state of the Polish pension system, including the existence of the so-called pension gap are mentioned. A comparison of applicable regulations and principles relating to the rights of people was made. An analysis of European Union law and a review of both national and European case law has also become an essential need in consideration regarding pension gender discrimination. The article also quotes data on the retirement age in selected European countries, based on which conclusions were drawn. The analysis of legal provisions, proposed changes, case law, and legal theory became the basis for final considerations that attempt to answer the question of whether gender discrimination in pensions a common phenomenon is and whether this phenomenon occurs under the applicable legal status.

4대 공적연금의 연령별 사망률 데이터 구축에 관한 연구

In this study, we aimed to address the issue of not reflecting the characteristics of each public pension system by constructing data on mortality rates by age group for the four public pensions, which had not been established before. To do this, we utilized NHID from National Health Insurance Service and estimated values from statistical yearbooks of the four public pension agencies, along with data obtained through information disclosure requests. Successfully, we constructed mortality rate data by age group. During the data construction process, issues such as data integration and correction arose, which were addressed using statistical methods. Using the constructed data, we compared the life tables of five groups: subscribers and recipients of the four major public pensions, and non-subscribers, for the years 2011 to 2018, and compared life expectancies. The comparison results showed that overall, the order of average life expectancy was non-participants ≤ National Pension ≤ Government employee Pension ≤ Military Pension ≤ Teachers Pension participants and recipients, with significant differences observed. This study is the first in Korea to construct mortality rate data by age group for the four public pensions, which could serve as a foundational dataset for new fiscal projections of public pensions, contributing to addressing issues related to public pension reform.

Periodization of stages of the Russian Federation pension system reforming

Subject. This article examines the pension system of Russia in the period from 1990 to the present, the step-by-step process of its formation, development, reform, and accompanying problems. Objectives. The article aims to periodize the process of pension reforming in post-Soviet Russia, describe the main stages, summarize the transformations, and assess the further prospects of the pension system. Methods. For the study, we used comparative, statistical, analytical, and chronological methods. Results. The article identifies the key stages in the development of the pension legislation of the Russian Federation and analyzes each of them from the standpoint of setting goals, their implementation and consequences, and the ensuing problems. Conclusions. The decline in the pension replacement rate, the budget deficit of the Social Fund of Russia, the liquidation of the State-funded pension and the unclear prospects of the new long-term savings programme cast doubt on the sufficiency and effectiveness of the reforms carried out. In the future, compulsory pension insurance will develop towards a pay-as-you-go pension scheme. The funded component of the system will move to the sphere of non-State pension provision.

Корпоративные инициативы духовенства Тобольской епархии по материальному обеспечению священно-церковнослужителей (последняя четверть XIX – начало XX в.)

The article deals with the initiatives of the clergy of the Tobolsk diocese in the issue of material provision of clergy and clergymen in the last quarter of the XIX - early XX centuries. The article characterizes the clergy in the context of the socio-economic status of clerics, based on the regional material. It shows the transition from institutional to corporate method of material provision of the clergy due to the critical attitude of the clergy to the reforms of the pension system, as well as the process of formation of new forms of non-state pension provision among the clergy. For the first time on the basis of the material presented in Tobolsk diocesan bulletins the evolution of the statute of the mutual aid fund of the clergy of the Tobolsk diocese, as well as the factors that influenced its changes and additions were traced. It is shown that in the process of administration of the new diocesan structure there were issues that were not spelled out in the first draft of the fund, which did not provide for all cases of issuing a lump-sum allowance, return of membership fees to the participants of the fund and the issuance of refundable loans and required immediate consideration. On the basis of the reports of the Mutual Aid Fund of the clergy of the Tobolsk diocese the cash flow, the issuance of lump-sum allowances and loans of the Mutual Aid Fund of the clergy of the Tobolsk diocese in 1894-1914 are traced. The author comes to the conclusion that the evaluation of the activities of the mutual aid fund of the clergy of the Tobolsk diocese can not be considered only through the prism of the received lump sum benefits and loans. In spite of the fact that the main task of the fund was not achieved - the transformation into an emeritus fund, and the clergy did not receive non-state pensions, it was possible to achieve a positive impact on the material situation of the clergy, who were in extremely difficult financial situation.

Социальное обеспечение пенсионеров в Китае: современность и перспектива

Pension systems across different states have evolved under the influence of national characteristics and traditions. Achieving complete universality of social institutions in all countries is impractical; instead, it is feasible to develop specific schemes for their organization. China is no exception in this regard. Currently, there is a need for the improvement of state’s policy related to pension funds to enhance the sustainability of the social payment system. In this paper, based on the conducted SWOT analysis, certain measures are proposed aimed at differentiating the interests of all beneficiaries of social pensions in China – the government, enterprises and people. The formulation of a number of policy recommendations aimed at the sustainable development of China’s social pension system constitutes the novelty of the study and lays the foundation for further scientific developments in this direction.

Old-Keynesianism in the New Keynesian Model

I investigate an ‘old Keynesian’ fiscal policy in which government spending endogenously responds to inflation and the output gap when the nominal interest rate is pegged at the ZLB. I do so within a standard Representative Agent New Keynesian model (RANK), as well as a two-period Overlapping Generations New Keynesian model (OLG-NK). For both model versions, I find that the equilibrium values for inflation and the output gap under a standard Taylor rule regime can be replicated under the ‘old Keynesian’ regime. However, a unique stable countercyclical equilibrium is only feasible within the OLG-NK model and crucially depends on the pension system.

Pension Regulations and the Socio-Economic Wellbeing of Retirees in Nigeria

The increment of production output has been put forward as one of the main purposes of retirement world over. Nevertheless, how much this purpose is achieved has been questioned as workers and retirees have always complained of how the pension system has not been living up to their expectation which downs on their motivation to work productively. This has led many studies into the pension system and its relationship with the retirees, yet none have considered the place of the pension regulations in the socioeconomic wellbeing of the retirees. This study has therefore evaluated the role of pension regulators in preparing retirees for retirement; investigated the effect of pension regulations on the social status of retirees; investigated the impact of pension regulations on the economic life of retirees; and explored factors that promote the socio-economic wellbeing of retirees. The study was anchored on the social contract theory using primary data collected from federal workers, analysed with the use of percentage and mean score. The study found that the pension regulation does not have positive impact on the socioeconomic wellbeing of the retirees. This is so because, the regulators have not been living up to their responsibilities of educating the employees on the new pension system, attending to petitions of RSA holders and investigating impropriety by the PFAs and PFCs. The study therefore recommends a general scrutiny of the pension regulatory system and more.

AKPIN fintech application as one of the drivers for non-state pension system development

The article studies the subject of improving the non-state pension provision mechanism considering the fintech application implementation into the system. The purpose of the study is to develop an application conceptual model in the framework of pension planning and individual pension strategies formation considering constant monitoring of changes in the legislative, economic, and other spheres to ­create an additional way for citizens to independently form long-term savings for developing the third level of the pension system. Information synthesis and analysis, available literature review, comparison, the results obtained formalization and specification have been carried out. The paper presents problems and analysis of existing programs to motivate long-term savings and proposals in the field of pension savings formation for developing the third level of pension provision. AKPIN fintech-application will allow to develop individual strategies for pension savings formation and will be aimed at a long-term strategy implementation for developing the accumulative component of the pension system in Russia. The proposed application has the ability to analyze the user’s data and, based on it, offer recommendations to increase their savings. If the user decides to spend funds, it can also issue recommendations on request. Due to continuous monitoring of the news background, financial regulators’ actions, financial indicators and changes in legislation, the application can offer up-to-date recommendations and assist users in making effective individual decisions in the area of pension savings management for citizens of the Russian Federation.

How does the digital economy affect the sustainability of pensions? Evidence from China

ABSTRACT The relationship between an ageing population and pension sustainability is interrelated with the positive effect of the digital economy on both. However, there has been limited research conducted on the connection between the digital economy and pensions. In this study, we analyse the impact channels of the digital economy on pension sustainability using panel data at the city and provincial levels and an intermediary effect model. The analysis indicates that the digital economy can enhance the sustainability of pension funds through the mediating transmission mechanisms of economic growth, income, and employment effects. Furthermore, the development of a digital economy can effectively regulate the impact of ageing on the sustainability of pensions. We also discuss the relationship between digital development, population structure, and sustainable development of pension systems, along with policy advice.