Pension Business Research Articles

Feasibility Analysis and Strategic Suggestions for the Development of Residential Pension in Weihai City

Population aging has become one of the serious problems facing our country, but with the increasing improvement of people's living standards, to meet the basic needs of the elderly pension business has been difficult to meet the needs of the elderly multi-level and personalized pension, tourism, vacation as the main form of hostel pension industry has gradually entered the field of vision of the elderly and has been a certain development. This paper starts from the swot analysis of Weihai City, Shandong Province, which develops hostel industry, and then puts forward the optimization suggestions for the development of hostel pension in order to promote the further development of the hostel pension industry in China.

Formation of the Legal Basis for Social Security of Disabled People
 of the Great Patriotic War in the BSSR (1940−1950s)

The article is devoted to the formation of the main provisions of the legislative framework for social security of disabled people of the Great Patriotic War in the first post-war years in the BSSR. The directions in which the Union and Republican governments adopted the most important laws and regulations that determined the further development of social support for war invalids are considered. The results obtained allow us to conclude that the adoption of the Law «On the demobilization
 of senior members of the active army» on June 23, 1945 served as the basis for the further construction of the social security system for disabled people of the Great Patriotic War and determined the most important areas of activity of social security
 bodies to provide assistance to them. Particular attention was paid to the legal regulation of payments to disabled people of the Great Patriotic War, pensions and other types of material support. One of the significant documents in this area, the “Law on State Pensions,” became a new stage in the pension business and
 contributed to the streamlining of their accruals and payments.

Identifying the determinants of lapse rates in life insurance: an automated Lasso approach

Lapse risk is a key risk driver for life and pensions business with a material impact on the cash flow profile and the profitability. The application of data science methods can replace the largely manual and time-consuming process of estimating a lapse model that reflects various contract characteristics and provides best estimate lapse rates, as needed for Solvency II valuations. In this paper, we use the Lasso method which is based on a multivariate model and can identify patterns in the data set automatically. To identify hidden structures within covariates, we adapt and combine recently developed extended versions of the Lasso that apply different sub-penalties for individual covariates. In contrast to random forests or neural networks, the predictions of our lapse model remain fully explainable, and the coefficients can be used to interpret the lapse rate on an individual contract level. The advantages of the method are illustrated based on data from a European life insurer operating in four countries. We show how structures can be identified efficiently and fed into a highly competitive, automatically calibrated lapse model.

Mobile Technology and Dissemination of Information in the Kenyan Insurance Industry

It is estimated that only 15 percent of Kenyans have made plans for retirement, and many people fall into poverty once they retire. A 2018 survey by the Unclaimed Property Asset register found that insurance companies hold 25 percent of unclaimed funds with 10 percent belonging to pensioners. This was attributed to a lack of effective information flow between insurance companies and the customers and also between various departments in the insurance companies. Further, there were numerous cases of loss of documents and files and certain files were untraceable in the departments. This paper investigates ways in which mobile technology influences dissemination of information for processing pension claims in the insurance industry. An improvement in dissemination of information for processing of pension claims can carry out a key function in increasing percentage of Kenyans making plans for retirement. The study deployed a descriptive study design. The target population in this study was 561 pensioners in Jubilee Insurance and 8 heads of pensions business, finance, legal services, internal audit, operations, information and communication technology, actuary, business development and strategy and business development departments. The sample size of this study was obtained by use of Krejcie and Morgan formula of determining sample size. As a result of the small number of heads of departments, they were not sampled. Through systematic sampling a sample of 288 pensioners was selected from the list of pensioners in Jubilee Insurance. The findings from the study led to a conclusion that mobile application has a positive and significant association with dissemination of information for pension claims processing in Jubilee Insurance. It was further revealed that text messages have a positive and significant influence on dissemination of information. Concerning unstructured supplementary service data (USSD) it was concluded that it has a positive and significant influence on dissemination of information. The study findings also revealed that voice calls have a positive and significant influence on dissemination of information for pension claims processing in Jubilee Insurance.

Re-designing the pension business processes for achieving technology-driven reforms through blockchain adoption: A proposed architecture

High administrative costs and associated operational inefficiencies present multiple challenges for pension industries across different countries. Although blockchain is considered a potential solution for these concerns, the pension industry has not fully leveraged this disruptive technology. This paper provides a blueprint for a blockchain-based end-to-end digital transformation of the pension industry. First, we identified the pre-requisites for blockchain adoption in pension. Then, we developed an architectural design of blockchain-based re-designed pension business processes. Subsequently, we elaborated on how smart contracts can make pension transactions in such redesigned processes optimized, automated, and error-free. Finally, we presented how blockchain can be integrated with the existing pension IT systems, using an API layer, to enable seamless onboarding of all pension participants to a single digital platform – a critical ask for any blockchain implementation. We concluded with an elucidation of the potential of such blockchain-based digital transformation of the pension industry in reducing turnaround time, lowering operating expenses, and facilitating the achievement of other pension reform agendas. This architecture of a blockchain-enabled pension network represents a flexible and scalable knowledge construct that can act as a foundation for further investigations by pension regulators or pension industry participants interested in achieving technology-driven pension operations reforms.

Conflict of interest and proxy voting by institutional investors

Political pressures can bias public pension funds (PPFs) toward activist shareholders. The pension business ties mutual fund families (MFFs) have with portfolio firms can bias them toward firm management. We examine how these contrasting conflicts of interest affect institutional investors' proxy voting behavior and show PPFs (MFFs) are considerably more supportive of activist shareholders (firm management) in voting, even if doing so may harm investment value. The biases are more pronounced when incentive conflicts are stronger. PPFs support shareholder (management) proposals more (less) when Democrats gain more power in the fund's home state. Conflicted PPFs are particularly active in supporting value reducing shareholder proposals.

IndiaFirst Life Insurance: Planning Next-Level Growth by Corporate Entrepreneurship

IndiaFirst Life Insurance (IFLI) became the 23rd entrant in India’s life insurance industry by launching its operations in November 2009 (IndiaFirst Life Insurance, 2015). IFLI went on to break-even within 6 years of its inception by declaring maiden profits in FY 2015–2016 (IndiaFirst Life Insurance, 2015). The company stated its vision as—‘To become a Life Insurance and Pension business leader that provides significant value to all its stakeholders enabling a true customer delight’ (IndiaFirst Life Insurance, 2015). In order to implement its vision, IFLI worked its human resource policies and processes around the ‘Employees First’ approach (IndiaFirst Life Insurance, 2015). These processes had helped IFLI to become the fastest-growing company in the life insurance sector, and it was ranked 12th amongst the private insurers in terms of market ranking in individual annual premium equivalent for FY 2016–2017 ( Times of India, 2017). The company aimed to become a top 10 life insurance provider in the next few years in India in terms of retail premium business ( Times of India, 2017).

THE POTENTIAL OF USING THE EXPERIENCE OF ZEMSTVO SUPERANNUATION DURING THE IMPLEMENTATION OF PENSION REFORM IN UKRAINE

The fact that the issue of zemstvo superannuation has been neglected by those developing the concept of modern pension reform in Ukraine raises serious concern of professional social work historians, researchers of the pension business genesis and the public. The similarity of the functioning principles of zemstvo superannuation funds of the 19 th and early 20 th centuries and the idea of implementing a corporate pension insurance system today enables not only to conduct an in-depth comparative analysis, but also to apply the historical experience practically. The given problem vision determines the relevance of our research. The purpose of the research is to study the instauration potential of the functioning experience of zemstvo superannuation funds into the concept and practices of reforming the pension system of modern Ukraine. Research methods used: logical, historical-genetic, futuristic, retrospective, narrative ones, synthesis, comparative and content analysis, typology and secondary information processing. We proved that, despite the interruption of tradition and evolution, there were two stages to distinguish in the development of the domestic private pension provision. The first stage related the functioning of zemstvo superannual, later pension insurance funds of the end of the 19 th and the beginning of the 20 th centuries. The second stage concerned the modern pension reform. We determined that both of these stages had similar preconditions and conditions of implementation, goals and objectives, mechanisms and principles of business organization, current methods and technologies. The utmost authors’ attention was drawn to the following identities of the two different-time private pension systems in question, namely shifting the responsibility for the quality of their implementation from the state to local governments; pursuing the goal to reduce the turnover of highly qualified personnel by establishing leading norms of social protection and pension guarantees; focusing on creating a corporate-parity variety of private pension system; traceability of passive resistance to attempts of introducing new principles of pension provision. The issues in question have been outlined, i.e. instauration potential of zemstvo superannuation experience into public administrative, legal regulative, information communicative and social spectra of preparation and realization of modern pension reform in Ukraine.

The Role of Pension Business Benefits in Institutional Block Ownership and Corporate Governance*

ABSTRACTWe investigate whether potential pension contracting benefits lead institutions that provide pension services to acquire ownership blocks in firms and the implications of such blockholdings on the firms' corporate governance. We use the 2006 Pension Protection Act, which expanded pension participation in certain states, as a quasi‐exogenous shock and find an increase in block ownership by pension‐providing institutions in firms with substantial operations in affected states. Further, we find that the acquisition of a large block increases the likelihood that the institution will provide future pension services to the firm. With regard to corporate governance, we find that the acquisition of large pension blockholdings is associated with higher CEO pay and lower CEO turnover following poor financial performance. However, contrary to the prediction of the private benefits hypothesis, we do not find consistent evidence that large pension blockholdings are associated with declining firm profitability, suggesting that pension institutions are incentivized to exert monitoring to preserve the investment value of their blockholdings. Overall, our evidence is consistent with pension service institutions acquiring ownership blocks to obtain pension contracts, but our evidence does not support the prediction that they use their influence to compromise shareholder value.

A Study on the Choice Attributes and Satisfaction of Pension by Self Image Type

Purpose &#8211; The purpose of this study is to identify the optional attributes that are important factors in visiting the pension after segmenting the market by self-image type for tourists who visited the pension in Jeju Island. The relations between with the demographic characteristics, tourism patterns, and the degree of satisfaction are analyzed. In addition, through this, the direction of Jeju pension business are offered for proper marketing establishment of future pension business. Research design, data, and methodology - The data was collected by convenience sampling method. The survey was conducted for pension lodge visitors among Jeju tourists. The questionnaire was designed and distributed to the visitors by self-administered questionnaire (SAQ) .The survey was proceeded from August 16, 2019 to August 23, 2019. A total of 330 copies were distributed and 313 copies were used for analysis. Frequency analysis was performed to identify the general characteristics of the sample. Factor analysis and reliability analysis were conducted to verify the reliability and validity of the attractive factors of tourist destinations. Results &#8211; According to the cross-analysis between selfimage type and demographic characteristics, there was a significant difference between groups by sex, age and occupation, but there was no difference between groups by household monthly average income. According to the location of tourist attractions, beautiful building design, and various accommodations, there was a significant difference (p <0.05) through the one-way dispersion analysis and post-assessment among the tourist attraction selection attributes by the self-image type of Jeju tourist visitors. In terms of facilities, colorful event shows, good access, historical attractions, and friendly staff, there were significant differences among the communities. Conclusions - This study was performed a cluster analysis on factors by self-image type for tourists visiting Jeju Pension, and tried to grasp the intention of revisit according to the demographic characteristics, pension selection attributes, and visitor s satisfaction. In order to increase satisfaction, efforts should be made to enhance the selectivity, perceived value, and self-efficacy of tourism. Most of the factors that are shown to be important to the tourists can be used for policy and marketing planning for Jeju tourism development in the future.

Surplus participation schemes for life annuities under Solvency II

Under the new European Solvency II capital requirements life insurance companies have to implement a market-consistent valuation framework. A special challenge is the estimation of the market value of liabilities for products containing future discretionary surplus payments such as with-profit or participating life annuities (PLAs). We develop a realistic stochastic asset and liability company model with longevity and capital market risk for participating life annuities. Based on this model we project future cash flows to policyholders and calculate the solvency capital requirement (SCR) over the cohort’s lifetime. Besides the insurer’s point of view, we also analyse the utility implications for different types of annuitants. Our model and analysis are not only interesting for those acting under Solvency II regulation, but also in further economic valuation frameworks of the pension business of insurance companies.

The Role of Public Pension Funds in Corporate Governance: Evidence from Proxy Voting

Political pressures can bias public pension funds toward activist shareholders. The pension business ties mutual funds have with portfolio firms can bias them toward firm management. We examine how these contrasting conflicts of interest affect institutional investors’ proxy voting behavior and show public pension funds (mutual funds) are considerably more supportive of activist shareholders (firm management) in voting, even if doing so may harm investment value. The biases are more pronounced when incentive conflicts are stronger. Public pension funds support shareholder (management) proposals more (less) when Democrats gain more power in the fund’s home state. Conflicted public pension funds are particularly active in supporting value reducing shareholder proposals.

Business Ties and Information Advantage: Evidence from Mutual Fund Trading

ABSTRACTThis article examines whether ties to portfolio firms’ management via pension business relationships provide mutual funds with an informational advantage. Funds become related to portfolio companies when fund families serve as trustees for firms’ employee pension plans. Selling by related funds is more likely to be motivated by an information advantage than their buying, because the latter is heavily influenced by the desire to secure pension inflows. We find that stocks with larger net sales by related funds experience lower future returns. Information appears related to firm fundamentals, as the return predictability of related funds’ selling concentrates in stocks with negative future earnings surprises. Consistent with an information‐based explanation, the predictive power of related funds’ selling for future returns is more pronounced when information uncertainty about the stock is higher. Our results contribute to a growing literature that shows the sources of informed trading by institutions.

Mutual Fund Voting and Pension Ties : Evidence from Proxy Voting

Because mutual funds are the largest equity holders and because the retirement assets that are managed by mutual funds have been growing, mutual fund managers may have more incentives to support management in order to attract and retain pension business. I explore whether pension business ties have an impact on voting behaviors of mutual funds by examining the link pension business ties between mutual funds and the firms to actual mutual fund voting outcomes. At the fund family level, I find a positive relation between pension ties and mutual funds’ voting support for management. This relation becomes stronger when there is a voting divergence among funds within the same families. At the individual fund level, I find that individual funds are more likely to vote with management if they are included as one of the investment options of the pension plan of their portfolio firms. This suggests that the SEC should at least consider the recent petition from the AFL-CIO proposing that the SEC require mutual funds to disclose business ties with the firms in which they invest.

Stochastic Asset Models for Actuarial Use in Ghana

The need for stochastic asset models has evolved from a common global standard for risk management in the Solvency II regime in Europe, IAIS Common Principles, Global ORSA standards NAIC, EIOPA, and OSFI. But the challenges in developing markets such as; lack of good quality data, inconsistent data coverage, market data not having long enough history, and lack of liquidity in certain parts of asset market have caused the absence of such models in Ghana. There have been a number of actuarial stochastic asset models designed for simulating future economic and investment conditions in several parts of the world. This study has discussed three of such models and determined which best fits the Ghanaian economic data. The data used for the empirical analysis in this study were taken from the Bank of Ghana database and the Ghana Stock Exchange. The study re-calibrated the models to derive the parameter set then compared the model results numerically after running 10000 simulations for 50 horizons. Investigations about the basic statistics of the simulated results for all the models are compared. The analysis revealed that all of the Ghanaian investment series used in the stochastic investment modeling are non-stationary in their mean, variance and auto-covariance. The study then found that the “Wilkie linear model” produced simulated values with similar characteristics to the historical data whiles the Whitten & Thomas TAR model produced simulated values with minimal forecast error. The study therefore suggests that since the “Wilkie linear model” has a relatively better parsimony, ready economic interpretation and its ability to mimic some important features of the Ghanaian economic series it deserves the attention of the actuary seeking to model jointly the behavior of asset returns and economic variables that matter in economic capital determination of insurance and pension business in Ghana.

Business Ties and Information Advantage: Evidence from Mutual Fund Trading

This paper examines whether ties to portfolio firms’ management via pension business relationships provides mutual funds with an informational advantage. Funds become related to portfolio companies when fund families serve as trustees for firms’ employee pension plans. Selling by related funds is more likely to be motivated by an information advantage than their buying, because the latter is heavily influenced by the desire to secure pension inflows. We find that stocks with larger net-sales by related funds experience lower future returns. Information appears related to firm fundamentals, as the return predictability of related funds’ selling concentrates in stocks with negative future earnings surprises. Consistent with an information based explanation, the predictive power of related funds’ selling for future returns is more pronounced when information uncertainty about the stock is higher. Our results contribute to a growing literature that shows the sources of informed trading by institutions.

One Possible Life Insurance Market Response to Ageing

This paper deals with the reaction of the life insurance industry to ageing and the next massive decumulation phase of pension funds worldwide. The industry has a well-established product, which is the annuity, a unique instrument to cope with longevity risk. But annuity markets remain thin. Demand- and supply-side elements of the market are explored and also regulatory issues. Some proposals are made for a more proactive involvement of the industry in the pension business by addressing demand side, supply side and regulatory concerns. The proposal is a Multi-tier Insurance Package, which combines different insurance products in order to cover longevity risk as well as bequest or long-term care motives.

The Response of Corporate Dividend Policy to The Abolition of Tax Credit in the United Kingdom (U.K.)

By abolishing the tax credit on dividends received by tax-exempt financial institutions in 1997, the effective rate of tax for share-holders such as pension funds increases significantly, and the tax preference for dividends is significantly reduced. The tax-exempt shareholders mainly consist of pension funds and insurance companies with respect to their pension business. This tax-exempt community is the most influential shareholders in many U.K. companies, and their tax preference for dividends may have an important impact on corporate dividend policy.The objective of this study is to examine whether the aggregate dividend payment changes following the 1997 abolition of the tax credit. Using aggregate data in time series from 1974 to 1999, this study finds that the percentage of forecast error in Lintner’s model does not change significantly between the pre- and post-abolition periods. Hence, there is no evidence that aggregate dividend payment decreases following the abolition of tax credit. This could be interpreted that the aggregate sample of U.K. firms indicates a little intention of changing their dividend policies in response to the abolition of tax credit.This study also investigates whether individual U.K. companies respond to the 1997 abolition of tax-credit. The test results show that the majority of companies in the sample do not change their dividend policies after the abolition of tax credit. It is possible that companies are reluctant to cut their dividend payment since the existing dividend payout could be sustained in the long-run. They also avoid sending negative signals to the market. Thus, companies typically chose to keep a dividend level relatively stable following the tax change in 1997. Only the minority of the U.K. companies experience a decline in their dividend payment. This evidence supports the hypothesis that the abolition of tax credit on dividends results in a decrease in aggregate dividend payment in order to satisfy a tax clientele.

The Legislative Basis of Systemic Review and Compensation for the Mis-Selling of Retail Financial Services and Products

This article examines a wholly new provision of the Financial Services and Markets Act 2000 (FSMA 2000). Section 404 FSMA 2000 has no direct antecedent in the legislation that governed the previous regulatory framework for the UK financial services industry and was introduced into FSMA 2000 with little debate and scrutiny at a late stage in the passage of that legislation. Legal and policy bases of section 404 are examined. These lie partly in the difficulties that beset the Review of Personal Pensions Business that began in 1992 under the previous financial services regulatory legislation. The article also looks forward at the new regulatory environment for retail financial services in the UK and asks whether the risk of the use of s 404 may hamper current public policy initiatives aimed at increasing savings and investment levels within the UK personal finance sector.

The Demand for Guarantees in Social Security Personal Retirement Accounts

This project evaluates how workers might invest their Personal Retirement Account (PRA) funds between safe and risky assets, depending on whether they are offered a rate of return guarantee on the risky asset. We focus on how asset allocation decisions might differ depending on participants' attitudes about risk and regret. If, for example, the return on the risky asset turns out to be very high when a worker retires, he might regret not having allocated a large enough portion of his contributions to the risky asset. On the contrary, if the stock market does poorly, the retiree might regret having invested at all in that asset. We show that anticipated disutility from regret can have a potent effect on investment choices in a PRA. If there is no guarantee, regret induces investors to move away from extreme decisions: that is, investors who take regret into account hold less stock if the risk premium is high, but more stocks if the risk premium is low. Further, a rate of return guarantee provided at no cost to the plan participant induces him to hold more stocks, with or without regret. We also show that, with or without regret, investors' willingness to pay for a guarantee rises with the level of the guaranteed return. This research could be informative regarding the potential profitability of the guaranteed pension business, which would help determine whether a government subsidy would be required to bring these products to market.